Document:

exv10w1

 

Exhibit 10.1

Cadence Design Systems, Inc.

Incentive Stock Award Agreement

1987 Stock Incentive Plan (“Plan”)

Cadence Design Systems, Inc. (the “Company”), pursuant to the Plan, hereby grants you an Incentive
Stock Award as set forth below (the “Award”). This award is subject to the terms and conditions
set forth in this Incentive Stock Award Agreement (this “Agreement”) and in the Plan attached
hereto; provided, however, that in the event of a conflict between the terms of this Agreement and
the terms of the Plan, the terms of this Agreement shall prevail. Capitalized terms that are not
defined herein shall have the meanings set forth in the Plan.

	 	 	 	 
	Grantee:

	 	 	 
	ID Number:

	 	 	 
	Incentive Stock Award Number:

	 	 	 
	Date of Award:

	 	 	 
	Vesting Commencement Date:

	 	 	 
	Number of Shares Subject to Incentive Stock Award:

	 	 	 

			
	Vesting Schedule:	 	One fourth of the Shares subject to the Award shall vest on each of the first
four anniversaries of the Vesting Commencement Date, subject to the Company’s achievement of
the performance goals set forth on Exhibit A attached hereto. If the performance goals for a
particular year are not met, the related Shares will be forfeited.

No Section 83(b) Election. You acknowledge and agree that you will be taxed on Shares
subject to this Award as they vest in accordance with the above schedule and that you will not make
an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to
any shares granted under this Agreement. If you make such an election in violation of this
Agreement then all unvested Shares shall immediately, upon discovery of the violation, be forfeited
and you will indemnify and hold harmless the Company for any lost tax deductions or other adverse
tax consequences suffered by the Company as a result of your violation.

Status of Award. From and after the Date of Award, Participant will be recorded as a
stockholder of the Company with respect to the Shares subject to the Award (whether vested or
unvested) and shall have all voting rights and rights to dividends and other distributions with
respect to such Shares unless and until any such Shares are forfeited or transferred back to the
Company.

Termination of Status as an Employee or Consultant. If you cease to serve as an Employee
or Consultant for any reason, other than your death, the vesting of your Shares shall immediately
cease on the effective date of termination of your status as an Employee or Consultant and all
unvested Shares subject to this Award shall be forfeited by you and cancelled and surrendered to
the Company without payment of any consideration.

 

 

Death of Participant. In the event of your death before all the shares have vested, if you
shall have been in Continuous Status (as defined in the Plan) as an Employee or Consultant since
the Date of Award, the number of shares scheduled to vest on the next vesting date shall be deemed
to have vested immediately prior to your death.

Board Authority. Any question concerning the interpretation of this Agreement or the Plan,
any adjustments required to be made under the Plan, and any controversy that may arise under the
Plan or this Agreement shall be determined by the Company’s Board of Directors or a committee of
directors designated by the Board pursuant to Section 4(a) of the Plan (including any subcommittee
or other person(s) to whom the committee has delegated its authority) in its sole and absolute
discretion. Such decision shall be final and binding.

Transfer Restrictions. Any sale, transfer, assignment, encumbrance, pledge, hypothecation,
conveyance in trust, gift, transfer by bequest, devise or descent, or other transfer or disposition
of any kind, whether voluntary or by operation of law, directly or indirectly, of unvested Shares
shall be strictly prohibited and void.

Securities Law Compliance. The Company may impose such restrictions, conditions or
limitations as it determines appropriate as to the timing and manner of any resales or other
subsequent transfers of any Shares issued as a result of or under this Award, including without
limitation (i) restrictions under an insider trading policy, (ii) restrictions that may be
necessary in the absence of an effective registration statement under the Securities Act of 1933,
as amended, covering the Award and/or the Shares underlying the Award and (iii) restrictions as to
the use of a specified brokerage firm or other agent for such resales or other transfers. Any sale
of the Shares must also comply with other applicable laws and regulations governing the sale of
such shares.

Acceptance. Your right to the Incentive Stock will be forfeited unless you deliver to the
Stock Administration Department, Cadence Design Systems, Inc., 2655 Seely Avenue, San Jose, CA
95134, a counterpart of this Agreement duly executed by you, no later than _______________, unless you
have received an extension from the Company in writing.

Cadence Design Systems, Inc.

By: ______________________

          Name

Title: ______________________

Date: ______________________

Acknowledged and Agreed

______________________

- 2 -

 

Exhibit A

Performance-Based Vesting Criteria

	 	 	 	 	 
	Shares Vesting	 	Performance Period	 	Performance Goal

- 3 -exv10w1

 

EXHIBIT 10.1

PURCHASE AND SALE AGREEMENT

between

Alon Petroleum Pipe Line, LP

and

Sunoco Pipeline L.P.

February 13, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	ARTICLE I CERTAIN DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	Certain Defined Terms	 	 	1	 
	 
	 	1.2	 	Other Definitional Provisions	 	 	10	 
	 
	 	1.3	 	Headings	 	 	10	 
	 
	 	1.4	 	Other Terms	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II PURCHASE AND SALE OF ASSETS	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1	 	Purchase and Sale	 	 	10	 
	 
	 	2.2	 	Title and Risk of Loss	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III PURCHASE PRICE	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Purchase Price	 	 	12	 
	 
	 	3.2	 	Effective Time	 	 	12	 
	 
	 	3.3	 	Allocation of Consideration	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV ASSUMED OBLIGATIONS; PRE-EFFECTIVE TIME LIABILITIES AND RETAINED LIABILITIES	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	Assumed Obligations	 	 	12	 
	 
	 	4.2	 	Pre-Effective Time and Retained Liabilities	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	Organization, Good Standing, and Authority	 	 	13	 
	 
	 	5.2	 	Enforceability	 	 	13	 
	 
	 	5.3	 	No Conflicts	 	 	13	 
	 
	 	5.4	 	Consents, Approvals, Authorizations and Governmental Regulations	 	 	14	 
	 
	 	5.5	 	Taxes	 	 	14	 
	 
	 	5.6	 	Litigation; Violations	 	 	15	 
	 
	 	5.7	 	Regulatory Status	 	 	15	 
	 
	 	5.8	 	No Proceedings	 	 	16	 
	 
	 	5.9	 	Contracts and Commitments	 	 	16	 
	 
	 	5.10	 	Title to and Condition of Assets	 	 	17	 
	 
	 	5.11	 	Sufficiency of Assets	 	 	17	 
	 
	 	5.12	 	Preferential Rights to Purchase	 	 	17	 
	 
	 	5.13	 	Broker’s or Finder’s Fees	 	 	17	 
	 
	 	5.14	 	Seller’s Employee Benefit Liabilities	 	 	18	 
	 
	 	5.15	 	Rights-of-Ways	 	 	18	 
	 
	 	5.16	 	Crude Oil	 	 	18	 
	 
	 	5.17	 	Assessments	 	 	18	 
	 
	 	5.18	 	Compliance with Property Instruments	 	 	18	 
	 
	 	5.19	 	Condemnation	 	 	19	 
	 
	 	5.20	 	Environmental Matters	 	 	19	 

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	 	5.21	 	Cathodic Protection; Nitrogen Purging	 	 	20	 
	 
	 	5.22	 	Pipeline Systems Integrity	 	 	20	 
	 
	 	5.23	 	Integrity Management Plan	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Organization, Good Standing, and Authorization	 	 	21	 
	 
	 	6.2	 	Enforceability	 	 	21	 
	 
	 	6.3	 	No Conflicts	 	 	21	 
	 
	 	6.4	 	Consents, Approvals, Authorizations and Governmental Regulations	 	 	21	 
	 
	 	6.5	 	Litigation	 	 	22	 
	 
	 	6.6	 	Sufficient Funds	 	 	22	 
	 
	 	6.7	 	Broker’s or Finder’s Fees	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII COVENANTS AND ACCESS	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 
	 	7.1	 	Conduct of Business	 	 	22	 
	 
	 	7.2	 	Access and Information	 	 	23	 
	 
	 	7.3	 	Buyer’s Indemnification for Access	 	 	23	 
	 
	 	7.4	 	Casualty Loss or Condemnation	 	 	23	 
	 
	 	7.5	 	Confidentiality	 	 	24	 
	 
	 	7.6	 	Names	 	 	24	 
	 
	 	7.7	 	Supplements to Exhibits and Schedules	 	 	24	 
	 
	 	7.8	 	Disclaimer Regarding Assets	 	 	25	 
	 
	 	7.9	 	HSR Act	 	 	25	 
	 
	 	7.10	 	Tariff Filings	 	 	25	 
	 
	 	7.11	 	Consents	 	 	26	 
	 
	 	7.12	 	Remediation Activities	 	 	26	 
	 
	 	7.13	 	Employees	 	 	27	 
	 
	 	7.14	 	COBRA	 	 	27	 
	 
	 	7.15	 	Damage to Assets	 	 	28	 
	 
	 	7.16	 	Non-Solicitation	 	 	28	 
	 
	 	7.17	 	Acquisition Proposals	 	 	28	 
	 
	 	7.18	 	Buyer’s Rights Regarding New Pipeline	 	 	29	 
	 
	 	7.19	 	Satisfaction of Conditions	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII CONDITIONS TO CLOSING	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	Seller’s Conditions	 	 	30	 
	 
	 	8.2	 	Buyer’s Conditions	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX CLOSING	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 
	 	9.1	 	Time and Place of Closing	 	 	32	 
	 
	 	9.2	 	Deliveries at Closing	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X TERMINATION	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.1	 	Termination at or Prior to Closing	 	 	33	 

ii

 

	 	 	 	 	 	 	 	 	 
	 
	 	10.2	 	Effect of Termination	 	 	34	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XI INDEMNIFICATION	 	 	34	 
	 
	 	 	 	 	 	 	 	 
	 
	 	11.1	 	General Indemnification	 	 	34	 
	 
	 	11.2	 	Limitation on Damages; Survival of Representations	 	 	35	 
	 
	 	11.3	 	Notice of Asserted Liability; Opportunity to Defend	 	 	36	 
	 
	 	11.4	 	Exclusive Remedy	 	 	38	 
	 
	 	11.5	 	Negligence and Strict Liability Waiver	 	 	38	 
	 
	 	11.6	 	Exclusion of Materiality	 	 	38	 
	 
	 	11.7	 	Certain Seller Indemnification Matters	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XII MISCELLANEOUS PROVISIONS	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	 
	 	12.1	 	Expenses	 	 	38	 
	 
	 	12.2	 	Further Assurances	 	 	39	 
	 
	 	12.3	 	Buyer Cooperation After Closing	 	 	39	 
	 
	 	12.4	 	Seller Cooperation After Closing	 	 	39	 
	 
	 	12.5	 	Identification of Buyer’s Property	 	 	39	 
	 
	 	12.6	 	Apportionment of Taxes and Recording Fees	 	 	39	 
	 
	 	12.7	 	Assignment	 	 	40	 
	 
	 	12.8	 	Entire Agreement, Amendments and Waiver	 	 	40	 
	 
	 	12.9	 	Severability	 	 	41	 
	 
	 	12.10	 	Counterparts	 	 	41	 
	 
	 	12.11	 	Governing Law, Dispute Resolution and Arbitration	 	 	41	 
	 
	 	12.12	 	Notices and Addresses	 	 	44	 
	 
	 	12.13	 	Press Releases	 	 	44	 
	 
	 	12.14	 	Offset	 	 	45	 
	 
	 	12.15	 	No Partnership; Third Party Beneficiaries	 	 	45	 
	 
	 	12.16	 	Transfer of Records	 	 	45	 
	 
	 	12.17	 	Negotiated Transaction	 	 	45	 

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	EXHIBITS
	 	 
	 
	 	 
	A-1
	 	Map of Pipeline Systems
	A-2
	 	Real Property Interests
	A-3
	 	Permits
	A-4
	 	Personal Property
	A-5
	 	Contract Rights
	B
	 	Excluded Assets
	C
	 	Form of Assignment of Easements
	D
	 	Form of Bill of Sale, Assignment and Assumption Agreement
	E
	 	Form of Seller Parent Guaranty
	F
	 	Form of Special Warranty Deed
	G
	 	Form of T&D Agreement
	 
	 	 
	SCHEDULES
	 	 
	 
	 	 
	1.1
	 	Scheduled Environmental Conditions
	3.3
	 	Purchase Price Allocation
	5.4(a)
	 	Consents, Approvals and Authorizations
	5.4(c)
	 	Post-Closing Consents
	5.5
	 	Taxes
	5.6
	 	Claims; Litigation; Violations
	5.7
	 	Regulatory Status
	5.9(a)
	 	Contracts
	5.10(a)(1)
	 	Real Property Interests
	5.10(a)(2)
	 	Material Assets
	5.10(b)
	 	Intellectual Property
	5.10(c)(1)
	 	Condition of Assets
	5.10(c)(2)
	 	MOPs of Amdel Pipeline and White Oil Pipeline
	5.11
	 	Sufficiency of Assets
	5.15
	 	Exception to Rights-of-Way
	5.18
	 	Compliance with Property Instruments
	5.21
	 	Cathodic Protection
	5.22
	 	Pipeline Systems Integrity
	5.23
	 	Integrity Management Plan
	8.1(h)
	 	Required Consents

iv

 

PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) dated February 13, 2006, is
between Alon Petroleum Pipe Line, LP, a Delaware limited partnership (“Seller”), and Sunoco
Pipeline L.P., a Texas limited partnership (“Buyer”). Buyer and Seller are sometimes
referred to collectively herein as the “Parties” and individually as a “Party.”

     WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from Seller, on the
terms set forth in this Agreement, certain crude oil pipelines and associated assets as are
hereinafter described.

     NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises and of the mutual covenants contained
herein, the Parties agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

     1.1 Certain Defined Terms. Capitalized terms used herein and not defined elsewhere in this
Agreement shall have the meanings given such terms as is set forth below.

     “Acquisition Proposal” shall have the meaning given such term in Section 7.17.

     “Acquisition Proposal Notice” shall have the meaning given such term in Section 7.17.

     “Affiliate” shall mean, with respect to any Person, any other Person that (a) Owns or
Controls the first Person, (b) is Owned by or Controlled by the first Person or (c) is under common
Ownership or Control with the first Person.

     “Alon Refining” shall mean Alon USA Refining, Inc, an Affiliate of the Seller.

     “Amdel Pipeline” shall mean an approximate 503 mile bi-directional common carrier
pipeline delivering crude oil from Nederland, Texas to Midland/Odessa, Texas. This pipeline
consists of approximately 503 miles of 10-inch pipe, the route of which pipeline is more
particularly depicted on the map attached hereto as Exhibit A-1.

     “Agreement” shall have the meaning given such term in the preface.

     “Arbitrable Dispute” means any dispute, claim, counterclaim, demand, cause of action,
controversy and other matters in question arising out of or relating to this Agreement or the
alleged breach hereof, or in any way relating to the subject matter of this Agreement or the
relationship between the Parties created by this Agreement, regardless of whether (a) allegedly
extra-contractual in nature, (b) sounding in contract, tort, or otherwise, (c) provided for by
applicable Legal Requirements or otherwise, or (d) seeking damages or any other relief, whether at
law, in equity, or otherwise.

     “Arbitration Rules” shall have the meaning given such term in Section 12.11.

 

 

     “Assets” shall have the meaning given such term in Section 2.1

     “Assignment of Easements” shall mean the Assignment of Easements in substantially the
form of Exhibit C.

     “Assumed Obligations” shall have the meaning given such term in Section 4.1.

     “Benefit Plan” shall mean any of the following that is sponsored, maintained or
adopted by Seller, for the benefit of directors, officers, employees or former employees (or their
beneficiaries) of Seller, or with respect to which Seller has any liability with respect to
Seller’s ownership or operation of the Assets: (a) any employee welfare benefit plan or employee
pension benefit plan as defined in sections 3(1) and 3(2) of ERISA, including a plan that provides
retirement income or results in a deferral of income by employees for periods extending to their
terminations of employment or beyond, a plan that provides medical, surgical, or hospital care
benefits or benefits in the event of sickness, accident, disability, death or unemployment; and (b)
any other employee benefit plan, program, agreement or arrangement, including a deferred
compensation plan, incentive plan, bonus plan or arrangement, stock option plan, stock purchase
plan, stock award plan, golden parachute agreement, severance plan, dependent care plan, cafeteria
plan, employee assistance program, scholarship program, employment contract, retention incentive
agreement, noncompetition agreement, consulting agreement, vacation policy, or other similar plan,
program, agreement or arrangement.

     “Bill of Sale” shall mean the Bill of Sale, Assignment and Assumption Agreement in
substantially the form of Exhibit D.

     “Business Day” shall mean any calendar day, other than Saturday and Sunday, on which
federally insured commercial banks in Dallas, Texas are generally open for business and capable of
sending and receiving wire transfers.

     “Buyer” shall have the meaning set forth in the preface.

     “Buyer Construction Option” has the meaning set forth in Section 7.18(b).

     “Buyer Group” shall have the meaning given such term in Section 7.12.

     “Buyer Indemnitees” shall have the meaning given such term in Section 11.1(b).

     “Buyer Refinery Easement” shall mean an easement or right of way granted to Buyer by
Alon Refining on mutually acceptable terms with respect to the portion of the White Oil Pipeline
and all appurtenances thereto that are located on or under real property owned by Alon Refining at
or adjacent to the Refinery, which easement or right of way shall grant Buyer such access to such
real property as is reasonably necessary for Buyer to own, operate and maintain such portion of the
White Oil Pipeline and all appurtenances thereto that are located on such real property.

     “Buyer Shared Easement Right” shall mean a partial assignment of easements granted to
Buyer by Seller with respect to the portion of the White Oil Pipeline that crosses the blanket
easement described in Item 21 of Exhibit B.

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     “Central Time” shall mean the current local time then in effect in Dallas, Texas.

     “Claim” shall mean any demand, demand letter, claim or notice of noncompliance or
violation or Proceeding.

     “Claim Notice” shall have the meaning given such term in Section 11.2(b).

     “Closing” shall have the meaning given such term in Section 9.1.

     “Closing Date” shall have the meaning given such term in Section 9.1.

     “Code” shall have the meaning given such term in Section 3.3.

     “Confidentiality Agreement” shall mean the Confidentiality Agreement between Buyer and
Alon USA, Inc. dated February 4, 2005.

     “Construction Election Notice” has the meaning set forth in Section 7.18(b).

     “Construction Option Period” has the meaning set forth in Section 7.18(b).

     “Contracts” shall have the meaning given such term in Section 2.1(d).

     “Control” shall mean the power to direct the management or policies of a Person,
whether through Ownership of voting securities, by contract or otherwise.

     “Conveyance Documents” means, collectively, (i) the Bill of Sale (ii) the Assignment
of Easement with respect to the Buyer Shared Easement Right, (iii) the easement or right of way
with respect to the Buyer Refinery Easement and (iv) each other Assignment of Easements and each
Special Warranty Deed, in each case necessary to assign, transfer and convey the Assets to Buyer at
the Closing.

     “DOJ” shall mean the Department of Justice of the federal government of the United
States of America.

     “Effective Time” shall have the meaning given such term in Section 3.2.

     “Election Notice” shall have the meaning given such term in Section 7.17.

     “Environmental Laws” shall mean all Legal Requirements and rules of common law
relating to pollution, protection, preservation or restoration of the environment (including
ambient air, surface water, groundwater, land surface, or subsurface strata) or natural resources
or preservation or protection of human health or safety, including applicable Legal Requirements
relating to Releases or threatened Releases of Hazardous Substances, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, transport, or handling of, or
exposure of any Person or property to, Hazardous Substances, including the Clean Air Act, the
Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), the
Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Federal Water
Pollution Control Act, the Safe Drinking Water Act, the Federal Hazardous Materials

3

 

Transportation
Law, the Occupational Safety and Health Act, and the Oil Pollution Act, as each has been amended
from time to time and all other environmental conservation and protection laws, in each case as in
effect as of the Effective Time.

     “Environmental Matters” shall mean any matter, liability, circumstance, obligation,
responsibility or concern (i) arising under Environmental Laws and (a) resulting from or
attributable to actual, threatened, or alleged Releases of Hazardous Substances into ambient air,
surface water, groundwater, land surface or subsurface strata, or (b) resulting from or
attributable to exposures to Hazardous Substances, (ii) arising under Environmental Laws and
resulting from or attributable to the manufacture, processing, distribution, use, treatment,
storage, Release or threatened Release, transport, or handling of Hazardous Substances, or (iii)
otherwise arising under or related to Environmental Laws including any Claim or other noncompliance
therewith.

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

     “Excluded Assets” shall mean all of the following:

     (a) copies (but not the originals) of all Records;

     (b) all deposits, cash, checks, funds and accounts receivable attributable to Seller’s
interest in the Assets with respect to any period of time prior to the Effective Time;

     (c) claims of Seller for refund of or loss carry forwards with respect to (i) Taxes
attributable to any period prior to the Effective Time or (ii) any Taxes attributable to the
Excluded Assets;

     (d) all work product of Seller’s attorneys, records relating to the negotiation and
consummation of the transactions contemplated hereby and documents that are subject to a valid
attorney-client privilege; and

     (e) all rights, interests, assets and properties described in Exhibit B.

     “Exhibits” shall mean the exhibits attached to and made a part of this Agreement.

     “Expansion Project” shall mean the improvements to the Pipeline Systems that will be
made by Buyer or its Affiliates pursuant to the T&D Agreement in order to expand the capacity of
the Pipeline Systems to 40 MBD.

     “FCC” shall mean the Federal Communications Commission of the United States of
America.

     “FERC” shall mean the Federal Energy Regulatory Commission of the United States of
America.

     “FTC” shall mean the Federal Trade Commission of the United States of America.

4

 

     “Governmental Authorities” shall mean (i) the United States of America or any state or
political subdivision thereof within the United States of America and (ii) any court or any
governmental or administrative department, commission, board, bureau or agency of the United States
of America or of any state or political subdivision thereof within the United States of America.

     “Hazardous Substances” shall mean any substance that, whether by its nature or its
use, is regulated or from which liability might arise under any applicable Environmental Law
including any: (a) chemical, product, material, substance or waste defined as or included in the
definition of “hazardous substance,” “hazardous material,” “hazardous waste,” “restricted hazardous
waste,” “extremely hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous substance,”
“toxic substance,” “toxic pollutant,” “contaminant,” “pollutant,” or words of similar meaning or
import found in any applicable Environmental Law; (b) petroleum hydrocarbons, petrochemical or
petroleum products, petroleum substances, natural gas, crude oil, or any components, fractions or
derivatives thereof; and (c) asbestos containing materials, polychlorinated biphenyls, radioactive
materials, urea formaldehyde foam insulation, or radon gas.

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

     “Indemnified Party” or “Indemnitee” shall have the meaning given such term in
Section 11.3(a).

     “Indemnifying Party” or “Indemnitor” shall have the meaning given such term in
Section 11.3(a).

     “Intellectual Property” shall mean any and all technical information, trade secrets,
shop rights, designs, plans, manuals, computer software (to the extent transferable at no cost to
Seller), specifications and other proprietary and nonproprietary technology and data to the extent
primarily used in connection with the operation of the Assets.

     “Knowledge” shall mean, with respect to Seller, the actual knowledge, after reasonable
inquiry, of the following persons: Jeff Morris, Joseph Concienne, Randy Hillman, Timothy Munn,
Mary Truitt, Shai Even, Joseph Israel and Harlin Dean.

     “Legal Requirement” means any law, statute, code, ordinance, order, rule, regulation,
judgment, decree, injunction, franchise, permit, certificate, license, authorization, or other
directional requirement (including, without limitation, any of the foregoing that relates to
environmental standards or controls, energy regulations and occupational, safety and health
standards or controls including those arising under Environmental Laws) of any Governmental
Authority.

     “Lien” shall mean, except for the Permitted Encumbrances, any lien, mortgage, pledge,
claim, charge, security interest or other encumbrance, option or defect on title.

     “Loss” or “Losses” shall mean any and all damages, demands, payments,
obligations, penalties, assessments, disbursements, claims, costs, liabilities, losses, causes of
action, and

5

 

expenses (including interest, awards, judgments, settlements, fines, costs of
investigation and remediation, costs of supplemental environmental projects, fees, costs of defense
and reasonable attorneys’ fees, costs of accountants, expert witnesses and other professional
advisors and costs of investigation and preparation of any kind or nature whatsoever).

     “MBD” means thousand barrels per day.

     “MOP” shall mean the maximum operating pressure for the operation of pipelines as
determined by Title 49, Code of Federal Regulations, Part 195.406 (Maximum Operating Pressures).

     “Material Adverse Effect” shall mean a single event, occurrence or fact that, alone or
together with all other events, occurrences or facts, could reasonably be expected to result in (i)
a material loss to, or material diminution in value of, the Assets, taken as a whole, or other
material adverse effect on the ownership, use or operation of the Assets, taken as a whole, or (ii)
the prohibition or material delay or impairment of Seller’s ability to perform its obligations
contemplated by this Agreement, excluding, in each case, (w) matters that are generally
industry-wide developments or changes, (x) effects resulting from changes in Legal Requirements or
general economic, regulatory or political conditions, (y) matters resulting from actions taken
solely by Buyer or its Affiliates or (z) any matter contemplated by Section 7.4.

     “Material Damage or Condemnation” shall mean any (i) damage to any Asset for which the
cost of repair, net of available insurance proceeds, exceeds $3 million or prevents or materially
impairs Buyer’s ability to commence full operation of the Pipeline Systems for purposes of enabling
Buyer to perform its obligations under the T&D Agreement by June 1, 2006, or (ii) condemnation
which results in a taking of any Asset which has a replacement cost in excess of $3 million or
prevents or materially impairs Buyer’s ability to commence full operation of the Pipeline Systems
for purposes of enabling Buyer to perform its obligations under the T&D Agreement by June 1, 2006.

     “Negotiation Period” has the meaning set forth in Section 7.18(b).

     “New Pipeline” has the meaning set forth in Section 7.18(a).

     “New Pipeline Agreements” has the meaning set forth in Section 7.18(b).

     “Notice Period” shall have the meaning given such term in Section 11.3(c).

     “Organizational Documents” shall mean, with respect to a particular Person (other than
a natural person), the certificate or articles of incorporation, bylaws, partnership agreement,
limited liability company agreement, trust agreement or similar organizational document or
agreement, as applicable, of such Person.

     “Own or Ownership” shall mean ownership of fifty percent (50%) or more of the equity
interests or rights of distribution on account of equity of a Person.

     “Parties” shall have the meaning given such term in the preface.

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     “Party” shall have the meaning given such term in the preface.

     “Permits” shall have the meaning given such term in Section 2.1(b).

     “Permitted Encumbrances” shall mean the following:

          (i) the terms, conditions, restrictions, exceptions, reservations, limitations, and other
matters contained in any of the documents creating or transferring the Real Property Interests or
Permits (excluding any transfer by Seller other than to Buyer pursuant to this Agreement);

          (ii) the Contracts;

          (iii) liens for property taxes and assessments that are not yet due and payable (or that are
being contested in good faith by Seller by appropriate legal proceedings listed on Schedule
5.5);

          (iv) mechanic’s, materialmen’s, repairmen’s and other statutory liens arising in the ordinary
course and securing obligations incurred prior to the Effective Time and (A) for which Seller is
responsible for payment, or (B) for which Buyer has agreed to assume or pay pursuant to the terms
hereof;

          (v) any obligations or duties affecting the Assets under any Permit or applicable laws and all
rights reserved to or vested in any governmental body to control or regulate the Assets or the
operation thereof in any manner;

          (vi) utility easements, restrictive covenants, defects and irregularities in title,
encumbrances, exceptions and other matters that are of record that, singularly or in the aggregate,
will not materially interfere with the ownership, use or operation of the Assets taken as a whole;

          (vii) any encroachments and protrusions and shortages in area that do not materially interfere
with the use of the Assets;

          (viii) required third-party consents to assignment, preferential purchase rights and other
similar agreements with respect to which consents or waivers are obtained from the appropriate
parties for the sale contemplated hereby or, as to which the appropriate time for asserting such
rights has expired as of the Effective Time without an exercise of such rights;

          (ix) Post-Closing Consents;

          (x) any easements, rights-of-way or encumbrances created pursuant to the terms of this
Agreement; and

          (xi) all other encumbrances and exceptions that could not reasonably be expected to have a
Material Adverse Effect.

7

 

     “Person” shall mean any natural person, corporation, company, partnership (general or
limited), limited liability company, trust, joint venture, joint stock company, unincorporated
organization, or other entity or association, including any that is a Governmental Authority.

     “Personal Property” shall have the meaning given such term in Section 2.1(c).

     “Pipeline Systems” shall mean, collectively, the Amdel Pipeline and the White Oil
Pipeline.

     “Post-Closing Consents” shall mean consents or approvals from, or filings with,
Governmental Authorities or other consents customarily obtained following the closing of a
transaction similar to the transaction contemplated hereby, which are listed on Schedule
5.4(c).

     “Pre-Effective Time Liabilities” shall mean all liabilities, debts and obligations,
for all periods of time prior to the Effective Time, whether known or unknown, now existing or
hereafter arising, contingent or liquidated, as the same relate to the Assets. “Pre-Effective Time
Liabilities” shall not include any liabilities, debts or obligations relating to or arising out of
(a) the Retained Liabilities, (b) Environmental Matters or (c) the condition of any equipment or
fixtures included in the Assets.

     “Pre-Existing Environmental Condition” shall mean: (a) the Scheduled Environmental
Conditions; (b) any Environmental Matter, whether known or unknown, that arises out of or in
connection with ownership or operation of the Assets by any Person at or prior to the Effective
Time and that exists at (or, with respect to Hazardous Substances, are transported, stored,
treated, disposed or arranged to be transported, stored, treated, or disposed, or Released at, on,
under, to or from) any real properties other than the Real Property Interests; or (c) any other
Environmental Matter, whether known or unknown, that involves or relates to the Assets and is in
existence at or prior to the Effective Time.

     “Proceeding” shall mean any action, suit, claim, investigation, information request,
review or other judicial or administrative proceeding, at law or in equity, before or by any
Governmental Authority.

     “Purchase Price” shall have the meaning given such term in Section 3.1.

     “Real Property Interests” shall have the meaning given such term in Section 2.1(a).

     “Records” shall have the meaning given such term in Section 2.1(e).

     “Refinery” means the Big Spring, Texas refinery owned by Alon Refining.

     “Release” shall mean any depositing, spilling, leaking, pumping, pouring, placing,
emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching,
dumping, or disposing into the environment.

     “Remediate” or “Remediation” shall mean the removal, abatement, response,
investigative, cleanup, and monitoring activities undertaken pursuant to Environmental Laws to

8

 

address Pre-Existing Environmental Conditions, including excavation, landfarming, and
installation, operation and maintenance of remediation systems.

     “Remediation Activities” shall mean those activities undertaken in order to Remediate
any Pre-Existing Environmental Conditions pursuant to Environmental Laws.

     “Retained Liabilities” shall have the meaning given such term in Section 4.2.

     “RRC” means the Railroad Commission of Texas.

     “Scheduled Environmental Conditions” shall mean the Environmental Matters listed on
Schedule 1.1 hereto.

     “Schedules” shall mean the schedules attached to and made a part of this Agreement.

     “Seller” shall have the meaning given such term in the preface.

     “Seller Group” shall have the meaning given such term in Section 7.3.

     “Seller Indemnitees” shall have the meaning given such term in Section 11.1(a).

     “Seller Parent” shall mean Alon USA Energy, Inc., an Affiliate of Seller.

     “Seller Parent Guaranty” shall mean the Guaranty of Seller Parent in favor of Buyer in
substantially the form of Exhibit E.

     “Special Warranty Deed” shall mean the Special Warranty Deed in substantially the form
of Exhibit F.

     “T&D Agreement” shall mean the agreement among Alon USA, LP, an Affiliate of Seller,
and Buyer relating to certain crude oil volumes, the transportation of which will be through the
Pipeline Systems, the Expansion Project and the Tariff Filings, which agreement is substantially in
the form of Exhibit G hereto.

     “Tariff Filings” shall have the meaning given such term in Section 7.10.

     “Tax” or “Taxes” shall mean any Governmental Authority income tax, ad valorem
tax, excise tax, sales tax, use tax, franchise tax, real or personal property tax, transfer tax,
gross receipts tax or other tax, assessment, duty, fee, levy or other governmental charge, together
with and including, any and all interest, fines, penalties, assessments, and additions to Tax
resulting from, relating to, or incurred in connection with any of those or any contest or dispute
thereof.

     “Tax Consideration” shall have the meaning given such term in Section 3.3.

     “Tax Return” shall mean any report, statement, form, return or other document or
information required to be supplied to a taxing authority in connection with Taxes.

     “Third Party” shall mean (i) any Person other than a Party or its Affiliates and (ii)
any Governmental Authority.

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     “Third Party Claim” shall have the meaning given such term in Section 11.3(c).

     “Transaction Documents” shall mean the T&D Agreement, the Conveyance Documents, the
Seller Parent Guaranty and any other document related to the sale, transfer, assignment or
conveyance of the Assets to be delivered at Closing.

     “Transfer Taxes” shall have the meaning given such term in Section 12.6(b).

     “White Oil Pipeline” shall mean an approximate 25 mile common carrier pipeline
delivering crude oil from the Amdel Pipeline to Seller’s Big Spring refinery. This pipeline
consists of approximately 25 miles of 10-inch pipe, the route of which pipeline is more
particularly depicted on the map attached hereto as Exhibit A-1.

     1.2 Other Definitional Provisions. As used in this Agreement, unless expressly stated
otherwise or the context requires otherwise, (i) all references to an “Article,” “Section,” or
“subsection” shall be to an Article, Section, or subsection of this Agreement, (ii) the words “this
Agreement,” “hereof,” “hereunder,” “herein,” “hereby,” or words of similar import shall refer to
this Agreement as a whole and not to a particular Article, Section, subsection, clause or other
subdivision hereof, (iii) the words used herein shall include the masculine, feminine and neuter
gender, and the singular and the plural and (iv) the word “including” means “including, without
limitation.”

     1.3 Headings. The headings of the Articles and Sections of this Agreement and of the
Schedules and Exhibits are included for convenience only and shall not be deemed to constitute part
of this Agreement or to affect the construction or interpretation hereof or thereof.

     1.4 Other Terms. Other terms may be defined elsewhere in the text of this Agreement and
shall have the meaning indicated throughout this Agreement.

ARTICLE II

PURCHASE AND SALE OF ASSETS

     2.1 Purchase and Sale. Subject to the terms and conditions hereof, at the Closing, but
effective as of the Effective Time, Seller shall sell, assign, transfer and convey to Buyer and
Buyer shall purchase and acquire from Seller for the Purchase Price, the Assets. Buyer shall have
the right to direct Seller to assign the Assets to an Affiliate of Buyer at the Closing pursuant to
the Assignment; provided, however, that notwithstanding any such Assignment, Buyer shall remain
liable for all of the obligations as the purchaser of the Assets hereunder and shall remain a party
to the T&D Agreement. The term “Assets” shall mean all of Seller’s right, title and
interest in the following properties and interests described in subsections (a) through (f) below,
less and except the Excluded Assets:

     (a) Real Property. All fee property, rights-of-way, easements, surface use
agreements, licenses, leases, permits (including right-of-way permits from railroads and road
crossing permits or other rights-of-way permits from Governmental Authorities and including the
Buyer Shared Easement Rights and the Buyer Refinery Easement) and rights under condemnation
judgments described on Exhibit A-2 and all other right, title and interest of Seller in and
to real property by, through and under which the Pipeline Systems are operated and which

10

 

are
necessary for, or used or held for use primarily in connection with, the ownership, use, operation
or maintenance of the Pipeline Systems (collectively, the “Real Property Interests”), and
all right, title and interest of Seller in and to any fixtures, buildings and improvements located
on such Real Property Interests.

     (b) Permits. All of Seller’s right, title and interest in and to all assignable
permits, licenses, certificates, orders, approvals, authorizations, grants, consents, exemptions,
variances, concessions, warrants, franchises and similar rights and privileges which are necessary
for, or used or held for use primarily in connection with, the ownership, use, operation or
maintenance of the Pipeline Systems (collectively, the “Permits”), including those Permits
more particularly described on Exhibit A-3.

     (c) Personal Property. All personal property of every kind and nature described on
Exhibit A-4 and all other right, title and interest of Seller in and to all personal
property of every kind and nature, whether tangible or intangible, that is necessary for or used or
held for use primarily in connection with, the ownership, use, operation or maintenance of the
Pipeline Systems (collectively, the “Personal Property”).

     (d) Contract Rights. All of Seller’s right, title and interest in and to the
contracts described on Exhibit A-5 (collectively, the “Contracts”).

     (e) Books and Records. All of Seller’s right, title and interest in and to all
existing contract, land, title, engineering, environmental, operating, accounting, business,
marketing, historical cost, revenue, throughput and other data (whether electronic or hard copy),
files, documents, instruments, notes, papers, ledgers, journals, reports, abstracts, surveys, maps,
books, records and studies necessary for or relating primarily to the Pipeline Systems or which are
held for use primarily in connection with, the ownership, use, operation or maintenance of the
Pipeline Systems (collectively, the “Records”).

     (f) Incidental Rights. To the extent assignable, all of Seller’s right, title and
interest in and to the following insofar as the same are necessary for the ownership and operation
of or relate primarily to any of the Assets described in (a) through (e) above: (i) all purchase
orders, invoices, storage or warehouse receipts, bills of lading, certificates of title and
documents, (ii) all keys, lock combinations, computer access codes and other devices or information
necessary to permit Buyer to gain entry to and/or take possession of the Pipeline Systems, the Real
Property Interests and the Personal Property and (iii) to the extent they arise out of any period
of time in which Buyer is liable to third parties for the Assets, the benefit of and right to
enforce all covenants, warranties, guarantees and suretyship agreements relating to the Assets
described in (a) through (e) above.

     2.2 Title and Risk of Loss. Title and, subject to the terms of this Agreement and the Transaction Documents, risk of loss
with respect to the Assets shall pass to Buyer at the Effective Time; provided, however, that
should the Closing not occur, title and risk of loss shall be deemed to remain in Seller for all
purposes and for all periods of time.

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ARTICLE III

PURCHASE PRICE

     3.1 Purchase Price. Subject to Section 7.4, the purchase price of the Assets shall be
sixty eight million dollars ($68,000,000) (the “Purchase Price”).

     3.2 Effective Time. If the Closing occurs, the effective time of the transfer of the
Assets from Seller to Buyer shall be at such time on the Closing Date that all conditions in
Article VIII have been satisfied or waived and all deliveries in Section 9.2 have been made (the
“Effective Time”).

     3.3 Allocation of Consideration. The Purchase Price and any other items of
consideration required to be allocated among the Assets for purposes of determining Buyer’s basis
in the Assets for federal income tax purposes (the “Tax Consideration”) shall be allocated
among the Assets as set forth on Schedule 3.3 (the “Purchase Price Allocation”).
The initial Schedule 3.3 attached to this Agreement on the date hereof sets forth the
initial Purchase Price Allocation by general asset class. Within thirty (30) days following the
Closing, Buyer shall prepare a revised Schedule 3.3 that sets forth the proposed final
Purchase Price Allocation by specific asset. Seller shall have a period of fifteen (15) days
following receipt of the proposed final Purchase Price Allocation in which to review and propose
changes to such Purchase Price Allocation. If Seller fails to propose any changes within such
fifteen (15) day period, the proposed final Purchase Price Allocation shall become final and
binding on Buyer and Seller. If Seller proposes changes to the final Purchase Price Allocation
within such fifteen (15) day period, Buyer shall make any such proposed changes as it may
deem reasonable and proper. If there is a dispute regarding any such proposed changes by Seller
and, as a result thereof, Buyer and Seller cannot agree to the final Purchase Price Allocation, any
such dispute shall be resolved in accordance with Section 12.11. Following the completion of the
final Purchase Price Allocation in accordance with this Section 3.3, or following the final
resolution of any dispute arising therefrom, the final Purchase Price Allocation shall be set forth
on a revised Schedule 3.3 and such revised Schedule 3.3 shall be binding on both
Parties for all purposes thereafter. Buyer and Seller shall prepare and file all Tax Returns
(including such reports and information returns as may be required under section 1060 of the
Internal Revenue Code of 1986, as amended (the “Code”), and any regulations thereunder and
any corresponding or comparable provisions of applicable state and local Tax laws) in a manner
consistent with the Purchase Price Allocation. In the event such allocation is disputed by any
taxing authority, the Party receiving notice of such dispute shall promptly notify the other Party
and the Parties shall consult with each other concerning the resolution of the dispute. The Parties
agree that each will furnish the other a copy of Form 8594 (Asset
Acquisition Statement under Section 1060) as filed with the Internal Revenue Service by such
Party or any Affiliate thereof within thirty (30) days of the filing of such form with the Internal
Revenue Service.

ARTICLE IV

ASSUMED OBLIGATIONS; PRE-EFFECTIVE TIME LIABILITIES AND RETAINED LIABILITIES

     4.1 Assumed Obligations. Subject to Seller’s obligations with respect to the Retained
Liabilities described in Section 4.2(a), as part of the consideration for the transactions

12

 

contemplated hereby and assuming that the Closing occurs, effective immediately following the
Effective Time, Buyer hereby assumes all rights, liabilities, duties and obligations, risk of loss
and any related responsibility for the ownership, operation or use of the Assets attributable to
any period of time after the Effective Time and any condition of or on the Assets arising or
accruing after the Effective Time (collectively, the “Assumed Obligations”).

     4.2 Pre-Effective Time and Retained Liabilities. Seller shall be responsible for and pay
and discharge in due course all liabilities, debts and obligations to the extent attributable to
each of the following: (a) Pre-Effective Time Liabilities; (b) Pre-Existing Environmental
Conditions; (c) Taxes owed by Seller and/or Seller Group for any period of time or portion thereof
that ends at or before the Effective Time; (d) any liability or obligation relating to any Benefit
Plan; (e) any liability or obligation relating to any Excluded Asset; and (f) any liability or
obligation relating to current or former employees of Seller and its Affiliates dealing with the
employment or terminations of employment of such persons by Seller or any of its Affiliates on or
prior to the Effective Time, including any liability for employment claims relating to unfair labor
practice charges, employment discrimination charges, wrongful termination claims, workers’
compensation claims and employment-related tort claims (subsections (a)-(f) collectively, the
“Retained Liabilities”). Neither Buyer nor any of its Affiliates shall assume or in any
way be liable or responsible for, any of the Retained Liabilities.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller hereby represents and warrants to Buyer:

     5.1 Organization, Good Standing, and Authority. Seller has all requisite power and
authority to enter into and perform this Agreement and the Transaction Documents, to perform its
obligations hereunder and thereunder and to carry out the transactions contemplated herein and
therein. Seller is a limited partnership duly formed, validly existing and in good standing under
the laws of the State of Delaware and has all requisite power and authority to own, operate and
lease the Assets and to carry on its business in the places and in the manner currently conducted
in regard to the Assets and is duly qualified as a foreign organization in good standing in the
State of Texas. The execution and delivery of this Agreement and the Transaction Documents and the
consummation by Seller of the transactions
contemplated herein and therein have been duly and validly authorized by all necessary action by
Seller. This Agreement has been duly executed and delivered by Seller. Buyer has been provided
with a true and correct copy of Seller’s Organizational Documents as currently in effect.

     5.2 Enforceability. This Agreement and, upon execution and delivery of the Transaction
Documents, the Transaction Documents, each constitute a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting creditor’s rights generally
and general principles of equity.

     5.3 No Conflicts. The execution, delivery and performance of this Agreement and the
Transaction Documents by Seller, the consummation of the transactions contemplated hereby or

13

 

thereby, and the compliance by Seller with the provisions hereof or thereof, will not, with or
without the passage of time or the giving of notice or both:

     (a) conflict with, constitute a breach, violation or termination of, give rise to any right of
termination, cancellation or acceleration of or result in the loss of any right or benefit under,
any agreement to which Seller is a party or by which it or the Assets are bound that would have a
Material Adverse Effect;

     (b) conflict with or violate Seller’s Organizational Documents;

     (c) result in the creation or imposition of any Lien on any of the Assets; or

     (d) violate any Legal Requirement applicable to Seller or its properties or assets or any
Permit that would have a Material Adverse Effect.

     5.4 Consents, Approvals, Authorizations and Governmental Regulations.

     (a) Except (i) for Post-Closing Consents, (ii) as may be required by the FERC with respect to
the Tariff Filings, (iii) as would not have a Material Adverse Effect or (iv) as set forth in
Schedule 5.4(a), no order, consent, waiver, permission, authorization or approval of, or
exemption by, or the giving of notice to or the registration or filing with, any Governmental
Authority or Person not a Party, is necessary for Seller to execute, deliver and perform this
Agreement or the Transaction Documents. Seller has received confirmation from the FTC that no
filing is required to be made under the HSR Act with respect to the transactions contemplated by
this Agreement based on the exemption for “unproductive real property” under 16 C.F.R. § 802.2(c).
Seller has provided to Buyer a Memorandum dated February 7, 2006 outlining communications between
the FTC and Seller’s counsel confirming the applicability of this exemption.

     (b) All material Permits of all Governmental Authorities required or necessary for Seller to
own and operate the Assets as a common carrier crude oil pipeline system in accordance
with generally accepted industry standards, including all necessary FCC licenses and T-4 and
T-5 permits issued by the RRC, have been duly obtained, are in full force and effect and are set
forth on Exhibit A-3, and Seller has received no written notification concerning, and there
are no, violations that are in existence with respect to the Permits and no Proceeding is pending
or, to Seller’s Knowledge, threatened with respect to the revocation or limitation of any of the
Permits. Notwithstanding anything herein to the contrary, the provisions of this Section 5.4(b)
shall not relate to or cover Environmental Laws or any Environmental Matters.

     (c) There are no Post-Closing Consents required for the consummation of the transactions
contemplated by this Agreement other than those listed on Schedule 5.4(c).

     5.5 Taxes. Except as set forth in Schedule 5.5:

     (a) except as otherwise provided in the first sentence of Section 12.6(a) with respect to ad
valorem taxes for the year 2006, all Taxes owed or claimed to be owed by, from or against Seller
relating to the Assets or the operation thereof at or before the Effective Time and all Taxes owed
by Seller that encumber the Assets have been or will be timely paid in full to the extent due

14

 

at or
before the Effective Time, except to the extent such Taxes are being contested by Seller in good
faith and Seller has established adequate reserves for the payment of the contested amount of such
Taxes;

     (b) all withholding Tax and Tax deposit requirements imposed on Seller and applicable to the
Assets or the operation thereof for any and all periods or portions thereof ending at or before the
Effective Time have been or will be timely satisfied in full at or before the Effective Time;

     (c) all Tax Returns that are required to be filed for, by, on behalf of or with respect to
Seller relating to the Assets or the operation thereof at or before the Effective Time have been or
will be timely filed with the appropriate Governmental Authority, all Taxes shown to be due and
payable on such Tax Returns have been or will be paid in full on or before their respective due
dates, and each of such Tax Returns were or will be complete and accurate in all material respects;

     (d) Seller is not under audit or examination by any Governmental Authority and there are no
suits or other actions, proceedings, investigations or claims now pending or threatened against
Seller with respect to any Tax or any matters under discussion with any Governmental Authority
relating to any Tax, or any claims for any additional Tax asserted by any Governmental Authority
against Seller, in each case relating to the Assets or the operation thereof; and

     (e) To the Seller’s Knowledge, all of Seller’s assets, other than intangible assets, have been
properly listed and described on the tax rolls for all periods prior to the Effective Time and no
portion of Seller’s assets constitutes omitted property for tax purposes.

     5.6 Litigation; Violations. Except as set forth on Schedule 5.6:

     (a) There is no injunction or restraining order, arbitration or Proceeding pending against
Seller that restrains or prohibits the consummation of the transactions contemplated by this
Agreement.

     (b) There is no Claim, investigation or examination, or any change in any zoning or building
ordinances pending or, to Seller’s Knowledge, threatened, against or affecting the Assets or the
ownership or operation of the Assets, at law or in equity, before or by any Governmental Authority.

     (c) Seller has owned and operated the Assets in compliance with applicable Legal Requirements.
Notwithstanding anything herein to the contrary, the provisions of this Section 5.6(c) shall not
relate to or cover Environmental Laws or any Environmental Matters.

     5.7 Regulatory Status. Except as set forth on Exhibit A-3 or Schedule 5.7,
there are no currently effective tariffs authorized and approved by the FERC or the RRC or on file
with FERC or the RRC as of the date of this Agreement applicable to the Pipeline Systems, or
currently pending rates, certificates, applications, Permits, or other filings that relate to the
Pipeline Systems made with any Governmental Authority prior to the date of this Agreement.

15

 

     5.8 No Proceedings. There are no pending or, to the Knowledge of Seller, threatened FERC
or RRC proceedings, actions or orders (including non-public investigations or enforcement actions)
involving the Assets.

     5.9 Contracts and Commitments.

     (a) Except (i) as set forth in Exhibits A-2, A-3 or A-5, (ii) for this Agreement, (iii) for
the Transaction Documents, (iv) for the Retained Liabilities, or (v) as set forth in Schedule
5.9(a), none of the Assets are subject to:

	 	(i)	 	any agreement, contract or commitment requiring the expenditure
or series of related expenditures of funds in excess of $50,000 individually or
$100,000 in the aggregate;
	 
	 	(ii)	 	any agreement, contract or commitment requiring the provision
of goods or services by Seller at a price less than Seller’s cost of producing
the goods or providing the services;
	 
	 	(iii)	 	any contract, agreement, indenture, note or other instrument
relating to the borrowing of money or any guarantee or other contingent
liability in respect of any indebtedness or obligation of any Person (other
than the endorsement of negotiable instruments for deposit or collection in the
ordinary course of business);
	 
	 	(iv)	 	any management service, employment, consulting or other similar
type contract or agreement or any collective bargaining agreement that would
affect Buyer’s ownership or operation of the Assets;
	 
	 	(v)	 	any agreement, contract or commitment that would limit the
freedom of Buyer or any Affiliate of Buyer following the Effective Time to own,
operate, sell, transfer, pledge or otherwise dispose of or encumber any of the
Assets or to compete with any Person or to engage in any business or activity
in any geographic area;
	 
	 	(vi)	 	any agreement, lease, contract or commitment or series of
related agreements, leases, contracts or commitments not entered into in the
ordinary course of business that is not cancelable by Seller either without
penalty to Seller or within thirty (30) days;
	 
	 	(vii)	 	any license, royalty or similar agreement relating to
Intellectual Property; or
	 
	 	(viii)	 	any agreement or contract to provide pipeline transportation services.

     (b) Seller is not in default (or to Seller’s Knowledge there is no event or circumstance that
with notice, or lapse of time or both, would constitute an event of default) under the terms of any
of the Contracts and all of the Contracts are in full force and effect, except as would not have

16

 

a Material Adverse Effect. To Seller’s Knowledge, no counterparty to any of the Contracts is in
default under the terms of such Contracts.

     5.10 Title to and Condition of Assets.

     (a) Except as set forth in Schedule 5.10(a)(1), Seller has good and marketable title
to all the Assets and, at the Effective Time, Seller shall convey to Buyer good and marketable
title to all the Assets, in each case free and clear of all Liens other than the Permitted
Encumbrances. Except as disclosed pursuant to Section 5.15 or as otherwise set forth on
Schedule 5.10(a)(1), the Real Property Interests constitute the only interests in real
property required for the ownership and operation of the Pipeline Systems. Schedule
5.10(a)(2) lists all material assets required for the operation of the Pipeline Systems.

     (b) Seller has not received any notice, whether written or oral, of infringement,
misappropriation or conflict with respect to Intellectual Property from any other Person with
respect to the operation of the Assets except as is described on Schedule 5.10(b), and the
ownership and operation of the Assets has not infringed, misappropriated or otherwise conflicted
with any patents, patent applications, patent rights, trademarks, trademark applications, service
marks, service mark applications, copyrights, trade names, unregistered copyrights, trade secrets
of any other Person except as would not have a Material Adverse Effect.

     (c) Except as set forth on Schedule 5.10(c)(1), the Assets are in adequate and
sufficient operating condition and repair, except for ordinary wear and tear, to permit Buyer to
operate the Pipeline Systems as a common carrier crude oil pipeline in accordance with applicable
mechanical integrity standards of the U.S. Department of Transportation and any
analogous state standards or regulations. The Automatic Custody Transfer (ACT) unit at the
Big Spring Refinery is in good operational condition and repair to permit Buyer to operate the
Pipeline Systems as a common carrier crude oil pipeline in accordance with applicable mechanical
integrity standards of the U.S. Department of Transportation and any analogous state standards or
regulations. The MOPs of the Amdel Pipeline and the White Oil Pipeline are set forth in
Schedule 5.10(c)(2).

     (d) Neither Seller nor any of its Affiliates have received any revenue with respect to the
operation of the Pipeline Systems during the 36-month period ending at the Effective Time.

     5.11 Sufficiency of Assets. Except as set forth on Schedule 5.11, at the Effective
Time, the Assets will constitute all of the assets, real and personal, tangible and intangible,
that are necessary or required to permit Buyer to operate the Pipeline Systems as a common carrier
crude oil pipeline in accordance with applicable mechanical integrity standards of the U.S.
Department of Transportation and any analogous state standards or regulations.

     5.12 Preferential Rights to Purchase. There are no preferential purchase rights,
preemptive rights, rights of first offer, rights of first refusal or similar rights to purchase any
portion of the Assets that are applicable to the transactions contemplated by this Agreement.

     5.13 Broker’s or Finder’s Fees. No investment banker, broker or finder has acted directly
or indirectly for Seller or any Affiliate of Seller in connection with this Agreement or the
transactions contemplated hereby. No other investment banker, broker, finder or other Person is

17

 

entitled to any brokerage or finder’s fee or similar commission in respect of the transactions
contemplated hereby based in any way on agreements, arrangements or understandings made by or on
behalf of Seller or any of its Affiliates.

     5.14 Seller’s Employee Benefit Liabilities.

     (a) With respect to any employee benefit plan, within the meaning of Section 3(3) of ERISA,
that is sponsored, maintained, or contributed to, or has been sponsored, maintained, or contributed
to within six years prior to the Closing Date, by Seller or any entity, other than the Buyer or any
of its Affiliates, that was at any time during the six-year period ending on the date of this
Agreement treated as a single employer together with Seller under Section 414 of the Code
(“Commonly Controlled Entity”), (A) no withdrawal liability, within the meaning of Section
4201 of ERISA, has been incurred, which withdrawal liability has not been satisfied, (B) no
liability to the Pension Benefit Guaranty Corporation has been incurred by Seller or any Commonly
Controlled Entity, which liability has not been satisfied, (C) no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302 of ERISA or Section 412 of the Code has
been incurred, and (D) all contributions (including installments) to such plan required by Section
302 of ERISA and Section 412 of the Code have been timely made.

     (b) Seller has complied with the group health plan continuation of coverage requirements of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), except for
failures to so comply that would not have a Material Adverse Effect.

     (c) There does not now exist, nor do any circumstances exist that could result in, any
“controlled group liability” of Seller or any of its Commonly Controlled Entities that would be, or
could become, a liability following the Closing of Buyer. As used in the preceding sentence, the
term “controlled group liability” means any and all liabilities (i) under Title IV of ERISA, (ii)
under section 302 of ERISA, (iii) under sections 412 and 4971 of the Code, (iv) as a result of the
failure to comply with the continuation of coverage requirements of section 601 et seq. of ERISA
and section 4980B of the Code, and (v) under corresponding or similar provisions of any foreign
Legal Requirement.

     5.15 Rights-of-Ways. Except as set forth on Schedule 5.15 or as would not have a
Material Adverse Effect, the entire continuous length of the Pipeline Systems are covered by the
Real Property Interests described on Exhibit A-2 and the Permits described on Exhibit
A-3.

     5.16 Crude Oil. Except as would not have a Material Adverse Effect, each of the Real
Property Interests and Permits allows for the transportation of crude oil through that portion of
the Pipeline Systems located on the land covered by such Real Property Interest or Permit.

     5.17 Assessments. Seller has no notice, whether written or oral, of any assessments
against the Assets for public improvements.

     5.18 Compliance with Property Instruments. Except as would not have a Material Adverse
Effect or as otherwise set forth on Schedule 5.18, (i) all of the instruments creating the
Real Property Interests are presently valid, subsisting and in full force and effect; (ii) there
are no violations, defaults or breaches under the instruments creating the Real Property Interests,
or, to the Seller’s Knowledge, existing facts or circumstances which upon notice or the passage of
time

18

 

or both would constitute a violation, default or breach under the instruments creating the
Real Property Interests; (iii) Seller has not received or given any notice of default or claimed
default under the instruments creating the Real Property Interests; (iv) the Assets are currently
being operated and maintained in compliance with all terms and provisions of the instruments
creating the Real Property Interests; and (v) Seller is not aware of, or participating in any
negotiations regarding, any pending material modifications to the instruments creating the Real
Property Interests.

     5.19 Condemnation. As of the date hereof, there has been no actual or, to Seller’s Knowledge, threatened taking
(whether permanent, temporary, whole or partial) of any part of the Assets by reason of
condemnation or the threat of condemnation.

     5.20 Environmental Matters. Except as set forth on Schedule 1.1:

     (a) The Assets and Seller’s operation thereof are, and within all applicable statute of
limitation periods have been, in compliance with all applicable Environmental Laws, except where
such non-compliance would not, either individually or in the aggregate, have a Material Adverse
Effect;

     (b) All Permits required under applicable Environmental Laws for operating and maintaining the
Pipeline Systems as a common carrier crude oil pipeline in accordance with generally accepted
industry standards are set forth in Exhibit A-3, have been obtained and are currently in
full force and effect, and the Seller has not received any written notice that any such existing
Permit will be revoked or any pending application for any new Permit or renewal of any existing
Permit will be protested or denied;

     (c) There is no action, suit, claim, demand, investigation, inquiry, notice, or proceeding
concerning any violation of, or any liability under, any applicable Environmental Law that is
pending or, to Sellers’ Knowledge, threatened against Seller with respect to ownership or operation
of the Assets and, to the Seller’s Knowledge, there are no conditions or circumstances that would
reasonably be likely to result in the receipt of such action, suit, claim, demand, investigation,
inquiry, notice, or proceeding.

     (d) With respect to the Assets, Seller is not currently operating or required to be operating
under any compliance order, decree, or agreement, any consent order, decree, or agreement, or
corrective action order, decree, or agreement issued by or entered into with any Governmental
Authority under any Environmental Law.

     (e) There has been no Release or, to Seller’s Knowledge, threatened Release, of Hazardous
Substances at, on, under or from any Real Property Interests and Seller is not currently performing
or required to be performing any Remediation Activities required under applicable Environmental Law
at these Real Property Interests.

     (f) The Seller has not received any written notice asserting an alleged Environmental Matter
under any applicable Environmental Law with respect to the existence, Release, threatened Release,
or Remediation of Hazardous Substances arising from operation of the Assets at, under, or from any
real properties offsite the Real Property Interests and to the Sellers’

19

 

Knowledge, there are no
conditions or circumstances that would reasonably be expected to result in the receipt of such
written notice.

     (g) The Seller has not received any written notice asserting that there has been any exposure
of any Person or property to any Hazardous Substances as a result of or in connection with
operation of the Assets that would reasonably be expected to form the basis for a claim for
damages or compensation and to the Sellers’ Knowledge, there are no conditions or
circumstances that would reasonably be expected to result in the receipt of such written notice.

     (h) The Seller has made available to Buyer complete and correct copies of all environmental
site assessment reports, studies, analyses, and correspondence on alleged Environmental Matters
that are in the Seller’s possession or control and relating to its ownership or operation of the
Assets.

     5.21 Cathodic Protection; Nitrogen Purging. Except as set forth on Schedule 5.21,
at all times during Seller’s ownership of the Pipeline Systems, Seller has continuously maintained
cathodic protection on the pipeline segments included in the Assets in accordance with Legal
Requirements applicable to an active crude oil pipeline located in the State of Texas. At all
times following Seller’s final draining and purging of the pipeline segments included in the
Assets, Seller has continuously maintained positive nitrogen pressure in all of such pipeline
segments.

     5.22 Pipeline Systems Integrity. To Seller’s Knowledge, Seller has provided to Buyer a
complete and accurate description of all dents, pipeline intrusions and other anomalies
(collectively, “Anomalies”) with respect to the pipeline segments included in the Assets,
based on the last pipeline inspections performed on the Pipeline Systems as set forth on
Schedule 5.22. Seller has repaired each of such Anomalies that it is required to repair
under applicable mechanical integrity standards of the U.S. Department of Transportation, any
analogous state standards or regulations or under judicial or regulatory orders or settlements with
any Governmental Authority, in a manner compliant with such standards, regulations, orders and
settlements, as the case may be. To Seller’s Knowledge, there are no Anomalies existing with
respect to the pipeline segments included in the Assets, other than any Anomalies that it is not
required to repair under applicable Legal Requirements.

     5.23 Integrity Management Plan. Schedule 5.23 accurately sets forth a complete
list of all 49 CFR Part 195 jurisdictional pipeline segments included in the Assets that could
impact a High Consequence Area (as defined in 49 CFR Part 195.452, “HCA”). Except as set forth on
Schedule 5.23, Seller has established an Integrity Management Plan and HCA Baseline
Assessment testing schedule in compliance in all material respects with all applicable regulations
of the U.S. Department of Transportation and any analogous state standards or regulations.
Schedule 5.23 includes a complete and accurate description of the Seller’s HCA Baseline
Assessment testing schedule for all relevant pipeline segments included in the Assets. Seller has
performed in all material respects all tests in accordance with the timeframes indicated in
Schedule 5.23 and has made available to Buyer all records of such tests.

20

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer hereby represents and warrants to Seller:

     6.1 Organization, Good Standing, and Authorization. Buyer has all requisite power and
authority to enter into and perform this Agreement and the Transaction Documents, to perform its
obligations hereunder and thereunder and to carry out the transactions contemplated herein and
therein. Buyer is a limited partnership duly formed, validly existing and in good standing under
the laws of the State of Texas and has all requisite power and authority to own, operate and lease
the Assets and to carry on its business in the places and in the manner currently conducted in
regard to the Assets. The execution and delivery of this Agreement and the Transaction Documents
and the consummation by Buyer of the transactions contemplated herein and therein have been duly
and validly authorized by all necessary action by Buyer. This Agreement has been duly executed and
delivered by Buyer. Seller has been provided with a true and correct copy of Buyer’s
Organizational Documents as currently in effect.

     6.2 Enforceability. This Agreement and, upon execution and delivery of the Transaction
Documents, the Transaction Documents, each constitute a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting creditor’s rights generally
and general principles of equity.

     6.3 No Conflicts. The execution, delivery and performance of this Agreement and the
Transaction Documents by Buyer, the consummation of the transactions contemplated hereby or
thereby, and the compliance by Buyer with the provisions hereof or thereof, will not, with or
without the passage of time or the giving of notice, or both:

     (a) conflict with, constitute a breach, violation or termination of, give rise to any right of
termination, cancellation or acceleration of or result in the loss of any right or benefit under,
any agreement to which Buyer is a party that would have a material adverse effect on the
transactions contemplated hereby;

     (b) conflict with or violate Buyer’s Organizational Documents; or

     (c) violate any Legal Requirement applicable to Buyer or its properties or assets that would
have a material adverse effect on the transactions contemplated hereby.

     6.4 Consents, Approvals, Authorizations and Governmental Regulations. Except (a) for
Post-Closing Consents, (b) as may be required by the FERC with respect to the Tariff Filings, or
(c) as would not have a material adverse effect on the transactions contemplated hereby, no order,
consent, waiver, permission, authorization or approval of, or exemption by, or the giving of notice
to or registration or filing with, any Governmental Authority or Person not a Party, is necessary
for Buyer to execute, deliver and perform this Agreement or the Transaction Documents.

21

 

     6.5 Litigation. There is no injunction or restraining order, arbitration or Proceeding
pending against Buyer which restrains or prohibits the consummation of the transactions
contemplated by this Agreement.

     6.6 Sufficient Funds. Buyer has and will have as of the Closing sufficient funds available
to it to pay the Purchase Price and to perform its other obligations pursuant to this Agreement.

     6.7 Broker’s or Finder’s Fees. No investment banker, broker or finder has acted directly
or indirectly for Buyer or any Affiliate of Buyer in connection with this Agreement or the
transactions contemplated hereby. No other investment banker, broker, finder or other Person is
entitled to any brokerage or finder’s fee or similar commission in respect of the transactions
contemplated hereby based in any way on agreements, arrangements or understandings made by or on
behalf of Buyer or any of its Affiliates.

ARTICLE VII

COVENANTS AND ACCESS

     7.1 Conduct of Business.

     (a) From and after the date hereof and up to and including the Effective Time (or earlier
termination of this Agreement), Seller shall: (i) conduct its business relating to, and operate
and maintain, the Assets in the usual, regular and ordinary course of business consistent with
Seller’s prior practices or as may be required by emergency or force majeure conditions; (ii)
maintain insurance on the Assets in accordance with Seller’s past practices and will not permit any
insurance policy relating to the Assets and naming it as a beneficiary or a loss payee to be
canceled or terminated or any of the coverage thereunder to lapse unless simultaneously with such
termination or cancellation replacement policies providing substantially the same coverage are in
full force and effect; and (iii) cooperate with Buyer to effect an orderly transition in the
ownership and operation of the Assets.

     (b) From and after the date hereof and up to and including the Effective Time (or earlier
termination of this Agreement), Seller shall not, without the prior written consent of Buyer (which
consent shall not be unreasonably withheld): (i) terminate or amend any Contract (except for
termination in accordance with the terms of such Contract); (ii) abandon or sell any Real Property
Interest; (iii) enter into any new contracts that would be binding upon Buyer or affect the Assets
unless such new contracts are either (A) cancelable by Buyer within 30 days of the Closing Date or
(B) entered into in the ordinary course of business of the Seller; (iv) sell, assign, lease,
mortgage, pledge, or create, assume or permit to exist any Lien upon, any of the Assets, except for
Permitted Encumbrances; (v) make any capital expenditure or other commitment for expenditure for
which Buyer would be responsible; or (vi) commit to any of the foregoing.

     (c) From and after the date hereof and up to and including the Effective Time (or earlier
termination of this Agreement), Seller covenants that except as may be required by emergency or
force majeure conditions or except as contemplated by this Agreement, unless the

22

 

prior written
consent of Buyer is obtained, Seller will (to the extent such following actions are related to the
ownership or operation of the Assets):

	 	(i)	 	maintain its books, accounts and records in the usual, regular
and ordinary manner, on a basis consistent with prior years, and will not
introduce any method of accounting inconsistent with that used in prior
periods.
	 
	 	(ii)	 	timely file all Tax Returns and all reports required to be
filed with any Governmental Authority.

     7.2 Access and Information. From and after the date hereof and up to and including the
Effective Time (or earlier termination of this Agreement), Seller shall afford to Buyer and its
officers, employees, agents, accountants, attorneys, investment bankers and other authorized
representatives reasonable access, during normal business hours, to the Assets, including the
Records. Seller shall also make available to Buyer and its officers, employees, agents,
accountants, attorneys, investment bankers and other authorized representatives, upon reasonable
notice during normal business hours, Seller’s personnel knowledgeable with respect to the Assets.
No investigations by Buyer or its officers, employees, agents, accountants, attorneys, investment
bankers or other authorized representatives shall reduce or otherwise affect the obligation or
liability of Seller with respect to any express representations, warranties, covenants or
agreements made herein or in any instrument, agreement or document executed and delivered in
connection with this Agreement. Each Party will cooperate with the other Party and its officers,
employees, agents, accountants, attorneys, investments bankers and other authorized representatives
in the preparation of any documents or other materials that may be required by any Governmental
Authority.

     7.3 Buyer’s Indemnification for Access. Buyer shall abide by Seller’s or any third party
operator’s safety rules, regulations, and operating policies while exercising its rights under
Section 7.2. BUYER AGREES TO DEFEND, INDEMNIFY, RELEASE, AND HOLD HARMLESS SELLER AND ITS PARENTS,
SUBSIDIARIES AND AFFILIATES, AND ALL OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, PARTNERS,
CONTRACTORS, AGENTS, REPRESENTATIVES, SUCCESSORS AND ASSIGNS (COLLECTIVELY, “SELLER GROUP”)
FROM AND AGAINST ALL CLAIMS OR LOSSES FOR INJURY TO OR DEATH OF ANY PERSON OR DAMAGE TO OR
DESTRUCTION OF ANY PROPERTY ARISING OUT OF OR RELATING TO ANY FIELD VISIT, ENVIRONMENTAL
ASSESSMENT, OR OTHER DUE DILIGENCE ACTIVITY CONDUCTED BY BUYER OR ANY AFFILIATE, OFFICER, AGENT OR
REPRESENTATIVE OF BUYER WITH RESPECT TO THE ASSETS; PROVIDED, HOWEVER, BUYER SHALL NOT BE LIABLE TO
ANY OF SELLER GROUP OR TO ANY THIRD PARTY FOR ANY LOSSES THAT ACTUALLY RESULT FROM THE NEGLIGENCE,
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF SELLER GROUP OR FOR ANY STRICT LIABILITY ARISING
OUT OF THE PRESENCE
OF HAZARDOUS SUBSTANCES ON OR UNDERLYING THE ASSETS. THE PARTIES AGREE THAT THIS PARAGRAPH
CONSTITUTES A CONSPICUOUS LEGEND.

     7.4 Casualty Loss or Condemnation. If, after the date hereof and prior to the Closing, any
part of the Assets shall be destroyed by fire or other casualty or if any part of the Assets shall

23

 

be taken in condemnation or under the right of eminent domain or if proceedings for such purposes
shall be pending or threatened, this Agreement shall remain in full force and effect
notwithstanding any such casualty, taking or proceeding or the threat thereof, except as provided
in this Section 7.4. If such casualty, taking or proceeding constitutes a Material Damage or
Condemnation, Buyer may, at its option, (a) elect to terminate this Agreement on or before the
Closing Date or (b) proceed with the Closing and reduce the Purchase Price by an amount agreed
between the Parties. If such casualty, taking or proceeding does not constitute a Material Damage
or Condemnation, the Parties shall proceed to Closing and the Purchase Price shall be reduced by an
amount agreed between the Parties, unless Seller, before the Closing Date, restores the affected
Assets to their condition immediately prior to such casualty, taking or proceeding.
Notwithstanding the above, with respect to any casualty, taking or proceeding or the threat thereof
affecting any of the Assets occurring prior to Closing, if Buyer elects to proceed with the
Closing, Seller shall (A) prior to Closing, diligently pursue insurance proceeds and condemnation
awards in connection therewith and (B) on and after Closing, cooperate with and assist Buyer in
obtaining any such insurance proceeds and condemnation awards to the extent the Purchase Price was
not reduced pursuant to the foregoing two sentences.

     7.5 Confidentiality. After Closing, unless Buyer otherwise agrees in writing, Seller shall
keep confidential all non-public, confidential or proprietary information pertaining to the Assets
and their operation prior to Closing for a period of three (3) years after the Closing Date and
otherwise in accordance with the Confidentiality Agreement; provided, however, that Seller shall
not be obligated to keep confidential any information that (i) is public or becomes generally
available to the public other than as a result of a disclosure by Seller, (ii) was or becomes
available to Seller after the Closing on a non-confidential basis from a source other than Buyer or
its Affiliates (provided that, to Seller’s knowledge, such source is not bound by any similar
confidentiality obligations), (iii) Seller needs to disclose in order to comply with its
obligations under this Agreement including, without limitation, its obligations under Sections 7.12
and 7.13 hereof, or (iv) Seller is required by Legal Requirements to disclose.

     7.6 Names. As soon as reasonably possible after the Closing, but in no event later than
ninety (90) days after the Closing, Buyer shall remove the names of Seller and its Affiliates,
including “Alon,” and all variations thereof, from the Assets. As soon as is commercially
reasonable after the Closing, Buyer shall make the requisite filings with, and provide the
requisite notices to, the appropriate Governmental Authorities to place the title or other indicia
of ownership in a name other than any name of Seller or any of its Affiliates, or any variations
thereof.

     7.7 Supplements to Exhibits and Schedules. Seller may, from time to time, by written
notice to Buyer at any time prior to the anticipated Closing Date, supplement or amend the Exhibits
and Schedules to correct any matter that would constitute a breach of any representation or
warranty of Seller herein contained; provided, however, except as provided in the penultimate
sentence of this Section 7.7, no such supplement or amendment will affect the rights and
obligations of the Parties under this Agreement. Buyer shall have a minimum of five (5) Business
Days to review such supplement or amendment and the Closing shall be extended as required to allow
Buyer to do so. Should Seller supplement or amend the Exhibits and Schedules as provided in the
immediately preceding sentence and the matter disclosed in such supplement or amendment, if not so
disclosed, would result in a failure of the condition set forth

24

 

in Section 8.2(a), Buyer may elect
to terminate this Agreement by written notice to Seller as soon as reasonably practicable but, in
any event, before Closing. Notwithstanding any other provision hereof, if the Closing occurs, any
such supplement or amendment will be effective to cure and correct for all purposes any breach of
any representation, warranty or covenant that would have existed by reason of Seller not having
made such supplement or amendment. Seller shall notify Buyer of any supplements or amendments to
the Exhibits and Schedules as soon as reasonably practicable after Seller becomes aware of a change
requiring the supplement or amendment.

     7.8 Disclaimer Regarding Assets. Except as is expressly set forth in this Agreement, BUYER
ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO ANY PART OF THE ASSETS OR THE CONDITION
THEREOF, INCLUDING, WITHOUT LIMITATION, (A) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (B)
ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (C) ANY IMPLIED OR EXPRESS
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (D) ANY IMPLIED OR EXPRESS WARRANTY OF
FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT AND (E) ANY WARRANTY OR REPRESENTATION REGARDING ANY
FUTURE VOLUMES OF CRUDE OIL TRANSPORTED THROUGH THE PIPELINE SYSTEMS, IT BEING THE EXPRESS
INTENTION OF BUYER AND SELLER THAT (EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN THIS AGREEMENT) THE
ASSETS SHALL BE ACCEPTED BY BUYER “AS IS,” “WHERE IS,” AND IN THEIR PRESENT CONDITION AND STATE OF
REPAIR; AND BUYER REPRESENTS TO SELLER THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS OF
THE ASSETS AS BUYER DEEMS APPROPRIATE, AND, EXCEPT WITH RESPECT TO ANY EXPRESS OBLIGATIONS OF
SELLER IN THIS AGREEMENT, BUYER WILL ACCEPT THE ASSETS AS IS, WHERE IS, IN THEIR PRESENT CONDITION
AND STATE OF REPAIR. THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS
LEGEND.

     7.9 HSR Act. Seller and Buyer shall comply in all material respects with the applicable requirements of the
HSR Act. Subject to regulatory constraints, Seller and Buyer shall cooperate with each other and
promptly furnish all information to the other Party that is necessary in connection with the
Parties’ compliance with the HSR Act. Seller and Buyer shall each keep the other Party fully
advised with respect to any requests from or communications with the DOJ or the FTC and shall
consult with the other Party with respect to all filings and responses thereto.

     7.10 Tariff Filings. Buyer shall file as promptly as practical with the FERC the tariff
rates for movements on the Pipeline Systems (the “Tariff Filings”) in accordance with the
provisions of the T&D Agreement. Seller will cooperate with Buyer with regard to the preparation
and filing of all filings in connection with establishing the initial tariff rates in accordance
with the T&D Agreement. Seller and Buyer shall each keep the other Party fully advised with respect
to any requests from or communications with the FERC regarding the initial tariff rates and shall
consult with the other Party with respect to all filings and responses thereto.

25

 

     7.11 Consents. Except with respect to the Post-Closing Consents, the forms of all consents
or waivers that are required to be obtained from any Person to the assignment of Seller’s interest
in the Assets to Buyer shall be prepared and delivered by Seller to such Person prior to Closing.
Seller shall make all commercially reasonable efforts to obtain such consents prior to or at
Closing. To the extent that any of the Assets are not assignable by the terms thereof, consents to
the assignment thereof cannot be obtained or where entitlement of Buyer to the Assets is not
recognized by any third party, the Assets shall be held by Seller in trust for Buyer and the
obligations with respect thereto shall be performed by Buyer in the name of Seller (including the
enforcement of rights against third parties), and all benefits and obligations derived thereunder
shall be for the account of Buyer. Buyer shall be responsible for and shall bear all costs
associated with obtaining the Post-Closing Consents, including costs resulting from increased
license fees or rents imposed in connection with the transfer to Buyer of the Assets subject to the
Post-Closing Consents; provided, however, that Seller shall use commercially reasonably
efforts to assist Buyer in obtaining all Post-Closing Consents.

     7.12 Remediation Activities. With respect to any Pre-Existing Environmental Condition,
Seller shall have the option to conduct, at its sole cost and expense, Remediation in compliance
with all applicable Environmental Laws or as directed by the appropriate Governmental Authority.
If Seller elects not to Remediate, then Buyer shall conduct such Remediation and Seller shall
indemnify and hold harmless Buyer from and against all costs and expenses incurred by Buyer in
connection with such Remediation in accordance with Seller’s obligations under Section 11.1(b)(ii).
In connection with such Remediation by Seller, (a) Buyer shall provide Seller with non-exclusive
access to the Assets and to utilities located or used in connection with the Assets in order for
Seller to conduct Remediation Activities with respect to the Pre-Existing Environmental Conditions;
provided, however, that such Remediation Activities do not unreasonably interfere with the
operation of the Assets, (b) Seller shall have the right to use the Assets as is reasonably
necessary in conducting such Remediation Activities; provided, however, that such use does not
unreasonably interfere with the operation of the Assets, (c) Buyer shall cooperate in good faith
with the completion of the Remediation Activities and (d) such Remediation Activities shall be
subject to the following requirements:

	 	(i)	 	Seller will coordinate the schedule of the Remediation with
Buyer and will not unreasonably interfere with the operation of the Assets;
	 
	 	(ii)	 	Seller will obtain the prior written consent of Buyer, which
consent will not be withheld unreasonably, to allow any consultant or
contractor retained by Seller to design and implement the Remediation (except
to the extent that such consultant or contractor has already been retained as
of the date hereof to design or implement the Remediation);
	 
	 	(iii)	 	Seller will not agree to or elect any Remediation that imposes
any material obligations on Buyer without the prior written consent of Buyer;
	 
	 	(iv)	 	Seller will provide Buyer draft copies of any report or plan
related to the Remediation at least five (5) Business Days before such report
or plan is to be submitted to the Governmental Authority and shall give due
consideration to any comments, suggestions or requests of Buyer in 

26

 

	 	 	 	connection
with the finalization of such draft reports or plans (except to the extent that
such report or plan has already been submitted to the Governmental Authority or
has been finalized as of the date hereof). Seller will keep Buyer appraised of
all material developments with respect to any report or plan that is submitted
to such Governmental Authority;
	 
	 	(v)	 	Seller will provide Buyer with copies of all Permits, reports,
plans and correspondence submitted to or received from a Governmental Authority
with respect to the Remediation; and
	 
	 	(vi)	 	Buyer shall have the right to attend any meetings with, or
hearings before, any Governmental Authority regarding the Remediation; provided
that, Buyer will not participate in such meetings except to respond to
inquiries from representatives of the Governmental Authority.

     SELLER AGREES TO DEFEND, INDEMNIFY, RELEASE, AND HOLD HARMLESS BUYER AND THEIR RESPECTIVE
PARENTS, SUBSIDIARIES AND AFFILIATES, AND ALL OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, PARTNERS,
CONTRACTORS, AGENTS, REPRESENTATIVES, SUCCESSORS AND ASSIGNS (COLLECTIVELY, “BUYER GROUP”), FROM
AND AGAINST ALL CLAIMS OR LOSSES FOR INJURY TO OR DEATH OF ANY PERSON OR DAMAGE TO OR DESTRUCTION
OF ANY PROPERTY ARISING OUT OF OR RELATING TO ANY REMEDIATION ACTIVITIES CONDUCTED BY OR ON BEHALF
OF SELLER OR ANY AFFILIATE, OFFICER, AGENT, OR REPRESENTATIVE OF SELLER WITH RESPECT TO THE ASSETS;
PROVIDED, HOWEVER, SELLER SHALL NOT BE LIABLE TO ANY OF BUYER GROUP FOR ANY LOSSES THAT ACTUALLY
RESULT FROM THE NEGLIGENCE, GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF ANY OF BUYER GROUP. THE PARTIES AGREE THAT THIS PARAGRAPH
CONSTITUTES A CONSPICUOUS LEGEND.

     7.13 Employees. Buyer has not agreed to and nothing herein shall be construed to obligate
Buyer to offer employment to any officer, employee, agent, or representative of Seller, including
those performing services relating to the Assets as of the Effective Time or the Closing Date. Any
successor clause or successor agreement in any labor contracts or other labor arrangements shall
not be applicable to the sale and purchase of any or all of the Assets or otherwise affect or
impose any conditions or obligations upon Buyer. With respect to any employees of Seller who
perform services with respect to any of the Assets and whose employment relationship with Seller is
terminated, Seller shall comply with all applicable Legal Requirements in connection therewith,
including the Worker Adjustment and Retraining Notification Act.

     7.14 COBRA. Seller or its Affiliates, and not Buyer or its Affiliates, shall be obligated
to provide such group health plan continuation of coverage as is required under COBRA for
qualifying events (as defined in COBRA) that occur with respect to a Benefit Plan on or prior to
the Closing Date. Seller shall provide COBRA continuation coverage (within the meaning of Section
4980B of the Code and the Treasury regulations thereunder) to all individuals who are M & A
qualified beneficiaries (within the meaning assigned to such term under Q&A-4 of Treasury
regulation Section 54.4980B-9) with respect to the transactions contemplated by this Agreement

27

 

for
the duration of the period to which such individuals are entitled to such coverage. Seller shall
take any and all necessary actions to ensure that Buyer and its Affiliates are not required to
provide such continuation coverage to any such individual at any time.

     7.15 Damage to Assets. Seller will deliver to Buyer prior to the Closing a description of
any damage, destruction or loss occurring to Seller’s Knowledge between the period from June 13,
2005 up to the Closing, whether or not covered by insurance, which damage, destruction or loss
materially affects the Assets. In addition, Seller will deliver to Buyer a description of any and
all right-of-way maintenance, pipeline patrols, encroachment response activities, pipeline and
valve inspections and repairs, cathodic protection inspections and repairs, coating inspections and
repairs, other corrosion control inspections and repairs, maintenance pigging activities, drip,
separation and other liquid removal work and other pipeline repairs or maintenance activities
performed by or on behalf of Seller with respect to the Pipeline Systems since June 13, 2005.

     7.16 Non-Solicitation. From and after the date of this Agreement, Seller shall not,
directly or indirectly, through any officer, director, employee, agent (including financial
advisors), partner or otherwise, solicit any Acquisition Proposal; provided, however, nothing
herein shall prohibit Seller from discussing and negotiating any unsolicited Acquisition Proposal.

     7.17 Acquisition Proposals.

     (a) This Agreement may be terminated at any time prior to Closing, subject to the remainder of
this Section 7.17, by written notice from Seller to Buyer if Seller has received a bid, offer or
proposal by any Person with respect to an acquisition of the capital stock of, or all or
substantially all of the assets of, Seller by any means whatsoever and Seller’s Board of Directors
has determined (after consultation with its independent legal counsel and financial advisors) that
such bid, offer or proposal is superior to the terms of the Transaction (an “Acquisition
Proposal”). Promptly following its receipt of an Acquisition Proposal, Seller shall deliver to
Buyer a written description of the material terms of such Acquisition Proposal with Seller’s
written notice of termination of this Agreement pursuant to this Section 7.17 (the “Acquisition
Proposal Notice”).

     (b) Within ten (10) Business Days of delivery of the Acquisition Proposal Notice, Buyer may
elect, by delivery of written notice to Seller (the “Election Notice”), to consummate the
Transaction on the terms set forth in the Acquisition Proposal Notice. If Buyer delivers an
Election Notice, the Parties shall (i) diligently and in good faith, within ten (10) Business Days
of delivery thereof, negotiate and execute an amendment to this Agreement to reflect the terms set
forth in the Acquisition Proposal Notice and (ii) consummate the Transaction in accordance with
this Agreement as so amended. If (A) Buyer does not deliver an Election Notice within such ten
(10) Business Day period or (B) Buyer timely delivers an Election Notice, but the Parties, acting
diligently and in good faith, have not executed an amendment to this Agreement to reflect the terms
set forth in the Acquisition Proposal Notice within ten (10) Business Days after delivery of the
Election Notice, then this Agreement shall automatically terminate and Seller may pursue the
Acquisition Proposal.

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     (c) In the event of the termination of this Agreement pursuant to the last sentence of
paragraph (b) of this Section 7.17, within five (5) Business Days after the effective date of
termination of this Agreement, Seller shall pay to Buyer by wire transfer of immediately available
funds to such account as Buyer shall specify an amount equal to three million, five hundred
thousand dollars ($3,500,000) as liquidated damages, which the Parties agree approximates Buyer’s
damages incurred in connection with the negotiation, preparation and termination of this Agreement.

     7.18 Buyer’s Rights Regarding New Pipeline.

     (a) At Closing, Seller shall reserve, and the applicable Assignments of Easements and, if
applicable, other Conveyance Documents, to be delivered by Seller shall provide, a right of way,
easement or similar right providing access to Seller to the Real Property Interests extending from
Midland, Texas to the Refinery as reasonably necessary to permit Seller to construct a new crude
oil pipeline extending from Midland, Texas to the Refinery for the purpose of transporting crude
oil to the Refinery (the “New Pipeline”). If any of the Real Property Interests do not
provide for multi-line easements or rights of way, Seller shall be permitted, from and after the
Closing, to request such easements of rights of way, at Seller’s sole cost and expense, from the
applicable grantors of the Real Property Interests, and Buyer shall use commercially reasonable
efforts to assist Seller in obtaining such easements or rights of way.
Seller shall promptly reimburse Buyer for any and all costs reasonably incurred by Buyer in
assisting Seller in obtaining such easements and rights of way.

     (b) If at any time after the date of this Agreement Seller desires to construct the New
Pipeline, Seller shall provide prompt written notice to Buyer of Seller’s desire to construct the
New Pipeline. For a period of 60 days after receiving such written notice from Seller (the
“Construction Option Period”), Buyer shall have the exclusive right to elect to construct,
own and operate the New Pipeline (the “Buyer Construction Option”) on terms that are
mutually acceptable to Buyer and Seller. If Buyer exercises the Buyer Construction Option by
providing written notice to Seller during the Construction Option Period (the “Construction
Election Notice”), then Buyer and Seller shall use their respective good faith efforts for a
period of 120 days following Buyer’s exercise of the Buyer Construction Option (the
“Negotiation Period”) to negotiate, execute and deliver definitive agreements on mutually
acceptable terms providing for the construction of the New Pipeline and the shipment of crude oil
volumes by Seller thereon and any necessary ancillary documents (collectively, the “New
Pipeline Agreements”). The Construction Election Notice shall set forth Buyer’s good faith
estimate of the costs to be incurred by Buyer in constructing the New Pipeline and Buyer’s proposed
terms (including tariffs and fees) with respect to shipments of crude oil by Seller on the New
Pipeline.

     (c) If Buyer does not exercise the Buyer Construction Option during the Construction Option
Period or Buyer and Seller fail to execute and deliver the New Pipeline Agreements during the
Negotiation Period, then for a period of 180 days thereafter, Seller may execute a binding contract
with a third party to construct the New Pipeline or may commence activities to construct the New
Pipeline for Seller’s ownership and operation. If Seller fails to execute a binding contract with
a third party or has not commenced activities for construction of the New Pipeline during such
180-day period and Seller thereafter desires to construct the New Pipeline,

29

 

then Seller shall again
comply with, and Buyer shall again have the rights set forth in, Section 7.18(b).

     7.19 Satisfaction of Conditions. Seller and Buyer will act in good faith to take all
actions and to do all things necessary or advisable in order to satisfy the conditions to Closing
set forth in Article VIII that are within their respective control.

ARTICLE VIII

CONDITIONS TO CLOSING

     8.1 Seller’s Conditions. The obligations of Seller to consummate the transactions
contemplated by this Agreement at Closing are subject to satisfaction on or before the Closing Date
of the conditions set forth below, any of which may be waived by Seller in writing; provided,
however, that Seller’s election to proceed with the Closing of the transactions contemplated hereby
shall not be deemed a waiver of any breach of any representation, warranty, covenant or agreement
herein, whether or not known to Seller or existing on the Closing Date, and the action shall not
prejudice Seller’s right to recover damages for any breach.

     (a) Representations. Each of the representations and warranties of Buyer herein
contained that is qualified by materiality or Material Adverse Effect shall be true and correct,
and each of the representations and warranties of Buyer that is not so qualified shall be true and
correct except for any failure of the same to be true and correct that would not reasonably be
expected to have a Material Adverse Effect, on the Closing Date with the same force and effect as
though they had been made on the Closing Date (except to the extent such representation or warranty
speaks as of an earlier date, in which case such representation or warranty shall be true and
correct as of such earlier date), and Buyer shall have delivered to Seller a certificate, dated as
of the Closing Date, from an authorized officer of Buyer’s general partner certifying to the
foregoing effect.

     (b) Performance. Buyer shall have performed, satisfied and complied in all material
respects with all obligations, covenants and agreements contained in this Agreement to be
performed, satisfied or complied with by Buyer at or prior to the Closing and Buyer shall have
delivered to Seller a certificate, dated as of the Closing Date, from an authorized officer of
Buyer certifying to the foregoing effect.

     (c) Pending or Threatened Matters. No suit, action or other Proceeding shall be
pending or threatened that could reasonably be expected to restrain, enjoin or otherwise prohibit
the consummation of the transactions contemplated by this Agreement.

     (d) HSR Act. Any waiting period under the HSR Act applicable to the consummation of
the transaction contemplated hereby shall have expired or been terminated, and neither the FTC nor
the DOJ shall have imposed any material conditions upon Seller’s ability to dispose of the Assets.

     (e) Buyer Secretary’s Certificate. Seller shall have received a certificate, dated as
of the Closing Date, signed by the Secretary or Assistant Secretary of Buyer’s general partner
certifying (i) the accuracy and completeness of the copies of, as well as the current effectiveness
of, the resolutions to be attached thereto of the Board of Directors of Buyer’s general partner

30

 

authorizing the execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated herein, (ii) the incumbency of the officers executing this Agreement on
behalf of Buyer and any documents to be executed and delivered by Buyer at the Closing, and (iii)
that attached to the certificate are true and correct copies of the Organizational Documents of
Buyer, as in force and effect on the Closing Date (the “Buyer Secretary’s Certificate”).

     (f) Buyer Officer’s Certificate. Seller shall have received from Buyer a certificate
of Buyer’s general partner to the effect set forth in Sections 8.1(a) and (b) above, dated the
Closing Date, signed by a duly authorized officer of Buyer’s general partner (the “Buyer
Officer’s Certificate”).

     (g) Good Standing. Buyer shall have delivered to Seller certificates issued by
appropriate Governmental Authorities evidencing the good standing and existence of Buyer, as of a
date not more than thirty (30) calendar days prior to the Closing Date, in the State of Texas. To
the extent provided for under applicable Legal Requirement, Buyer shall also have delivered
to Seller certificates or other writings issued by appropriate Governmental Authorities
evidencing that all applicable state franchise Taxes in the State of Texas have been paid.

     (h) Consents. All consents, licenses and approvals from all Third Parties listed in
Schedule 8.1(h), shall have been received.

     8.2 Buyer’s Conditions. The obligations of Buyer to consummate the transactions
contemplated by this Agreement at Closing are subject to satisfaction on or before the Closing Date
of the conditions set forth below, any of which may be waived by Buyer in writing; provided,
however, that, except as provided in Section 7.7, Buyer’s election to proceed with the Closing of
the transactions contemplated hereby shall not be deemed a waiver of any breach of any
representation, warranty, covenant or agreement herein, whether or not known to Buyer or existing
on the Closing Date, and the action shall not prejudice Buyer’s right to recover damages for any
breach.

     (a) Representations. Each of the representations and warranties of Seller herein
contained that is qualified by materiality or Material Adverse Effect shall be true and correct,
and each of the representations and warranties of Seller that is not so qualified shall be true and
correct except for any failure of the same to be true and correct that would not reasonably be
expected to have a Material Adverse Effect, on the Closing Date with the same force and effect as
though they had been made on the Closing Date (except to the extent such representation or warranty
speaks as of an earlier date, in which case such representation or warranty shall be true and
correct as of such earlier date), and Seller shall have delivered to Buyer a certificate, dated as
of the Closing Date, from an authorized officer of Seller certifying to the foregoing effect.

     (b) Performance. Seller shall have performed, satisfied and complied in all material
respects with all obligations, covenants, agreements and conditions contained in this Agreement to
be performed, satisfied or complied with by it at or prior to the Closing and Seller shall have
delivered to Buyer a certificate, dated as of the Closing Date, from an authorized officer of
Seller certifying to the foregoing effect.

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     (c) Pending or Threatened Matters. No suit, action or other Proceeding shall be
pending or threatened that could reasonably be expected to restrain, enjoin or otherwise prohibit
the consummation of the transactions contemplated by this Agreement.

     (d) HSR Act. Any waiting period under the HSR Act applicable to the consummation of
the transaction contemplated hereby shall have expired or been terminated, and neither the FTC nor
the DOJ shall have imposed any material conditions upon Buyer’s ability to acquire and operate the
Assets.

     (e) Seller Secretary’s Certificate. Buyer shall have received a certificate, dated as
of the Closing Date, signed by the Secretary or Assistant Secretary of Seller certifying (i) the
accuracy and completeness of the copies of, as well as the current effectiveness of, the
resolutions to be attached thereto of the Board of Directors of Seller authorizing the execution,
delivery and performance of this Agreement and the consummation of the transactions contemplated
herein, (ii) the incumbency of the officers executing this Agreement on behalf of Seller and any
documents to be executed and delivered by Seller at the Closing, and (iii) that
attached to the certificate are true and correct copies of the Organizational Documents of
Seller, as in force and effect on the Closing Date (the “Seller Secretary Certificate”).

     (f) Seller Officer’s Certificate. Buyer shall have received from Seller a certificate
of Seller to the effect set forth in Sections 8.2(a) and (b) above, dated the Closing Date, signed
by a duly authorized officer of Seller (the “Seller Officer’s Certificate”).

     (g) Good Standing. Seller shall have delivered to Buyer certificates issued by
appropriate Governmental Authorities evidencing the good standing and existence of Seller, as of a
date not more than thirty (30) calendar days prior to the Closing Date, in Texas and Delaware. To
the extent provided for under applicable Legal Requirement, Seller shall also have delivered to
Buyer certificates or other writings issued by appropriate Governmental Authorities evidencing that
all applicable state franchise Taxes have been paid.

     (h) Consents. All consents, licenses and approvals from all Third Parties listed in
Schedule 8.1(h), shall have been received.

     (i) No Adverse Effect. There shall have been no Material Adverse Effect.

ARTICLE IX

CLOSING

     9.1 Time and Place of Closing. The consummation of the transactions contemplated by this
Agreement (the “Closing”) shall take place at 10:00 a.m. Central Time in the offices of
Vinson & Elkins LLP, 1001 Fannin Street, Houston, Texas 77002, on the later to occur of March 1,
2006 or the second business day after the conditions set forth in Sections 8.1(d) and 8.2(d) have
been satisfied (the “Closing Date”), and shall be effective as of the Effective Time.

     9.2 Deliveries at Closing. At the Closing:

     (a) Seller will deliver or cause to be delivered to Buyer each of the following:

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	 	(i)	 	the executed Conveyance Documents, other than the Bill of Sale;
	 
	 	(ii)	 	an executed counterpart of the Bill of Sale;

	 
	 	(iii)	 	the executed Seller Parent Guaranty;
	 
	 	(iv)	 	an executed counterpart of the T&D Agreement;
	 
	 	(v)	 	the executed Seller Secretary’s Certificate;
	 
	 	(vi)	 	the executed Seller Officer’s Certificate;
	 
	 	(vii)	 	a Pipeline Transfer Certification (T-4 B) relating to the
Assets executed by Seller as the predecessor operator; and
	 
	 	(viii)	 	such other instruments, certificates and documents contemplated by this
Agreement to be delivered by Seller at or prior to Closing or as may be
reasonably requested by Buyer to evidence or effectuate the transactions
contemplated by this Agreement.

     (b) Buyer will deliver or cause to be delivered, as applicable, to Seller each of the
following:

	 	(i)	 	the Purchase Price in cash by wire transfer of immediately
available funds to an account previously designated by Seller in writing;
	 
	 	(ii)	 	an executed counterpart of the Bill of Sale;

	 
	 	(iii)	 	
an executed counterpart of the T&D Agreement;

	 
	 	(iv)	 	the executed Buyer Secretary’s Certificate;
	 
	 	(v)	 	the executed Buyer Officer’s Certificate; and
	 
	 	(vi)	 	such other instruments, certificates and documents contemplated
by this Agreement to be delivered by Buyer at or prior to Closing or as may be
reasonably requested by Seller to evidence or effectuate the transactions
contemplated by this Agreement.

ARTICLE X

TERMINATION

     10.1 Termination at or Prior to Closing. This Agreement may be terminated and the
transactions contemplated hereby abandoned as follows:

     (a) Seller and Buyer may elect to terminate this Agreement at any time on or prior to the
Closing Date by mutual written consent of the Parties;

33

 

     (b) Either Party by written notice to the other Party may terminate this Agreement if the
Closing shall not have occurred on or before June 1, 2006; provided, however, that neither Party
may so terminate this Agreement if such Party is at such time in material breach of any provision
of this Agreement;

     (c) Either Party may terminate this Agreement at any time on or prior to the Closing Date if
the other Party shall have materially breached any representations, warranties or covenants of such
other Party herein contained and the same is not cured within thirty (30) days after receipt of
written notice thereof from the nonbreaching Party;

     (d) Buyer may terminate this Agreement pursuant to Section 7.4 or Section 7.7; and

     (e) pursuant to Section 7.17.

     10.2 Effect of Termination. In the event that Closing does not occur as a result of either
Party exercising its right to terminate pursuant to Section 10.1, then neither Party shall have any
further rights or obligations under this Agreement, except that (i) nothing herein shall relieve
either Party from any liability for any willful breach of this Agreement, and (ii) the provisions
of Sections 11.2(a), 12.1, 12.8, 12.9, 12.10, 12.11, 12.12, 12.15 and 12.17 shall survive any
termination of this Agreement.

ARTICLE XI

INDEMNIFICATION

     11.1 General Indemnification.

     (a) Indemnification by Buyer. Effective upon Closing (except as otherwise provided in
this Section 11.1(a)), Buyer shall defend, indemnify and hold harmless Seller and its Affiliates,
and all of its and their directors, officers, employees, partners, members, contractors, agents,
and representatives (collectively, the “Seller Indemnitees”) from and against any and all
Losses asserted against, resulting from, imposed upon or incurred by any of the Seller Indemnitees
to the extent resulting from or arising out of:

	 	(i)	 	the breach of any of the representations, warranties,
covenants, or agreements of Buyer contained in this Agreement; or
	 
	 	(ii)	 	subject to Seller’s obligations with respect to the Retained
Liabilities described in Section 4.2(a), the Assumed Obligations.

     (b) Indemnification by Seller. Effective upon Closing, Seller shall defend, indemnify
and hold harmless Buyer and its Affiliates, and all of its and their directors, officers,
employees, partners, members, contractors, agents, and representatives (collectively, the
“Buyer Indemnitees”) from and against any and all Losses asserted against, resulting from,
imposed upon or incurred by any of the Buyer Indemnitees to the extent resulting from or arising
out of:

	 	(i)	 	the breach of any of the representations, warranties, covenants
or agreements of Seller contained in this Agreement; or

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	 	(ii)	 	the Retained Liabilities.

     11.2 Limitation on Damages; Survival of Representations.

     (a) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL EITHER
SELLER OR BUYER BE LIABLE TO THE OTHER, OR TO THE OTHER’S INDEMNITEES, UNDER THIS AGREEMENT FOR ANY
EXEMPLARY, PUNITIVE, CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES OR LOSS OF PROFITS; PROVIDED
THAT, IF ANY OF
THE SELLER INDEMNITEES OR BUYER INDEMNITEES IS HELD LIABLE TO A THIRD PARTY FOR ANY SUCH
DAMAGES AND THE INDEMNITOR IS OBLIGATED TO INDEMNIFY SUCH SELLER INDEMNITEES OR BUYER INDEMNITEES
FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES, THE INDEMNITOR SHALL BE LIABLE FOR, AND OBLIGATED TO
REIMBURSE SUCH INDEMNITEES FOR SUCH DAMAGES.

     (b) All representations, warranties, covenants and indemnities made by the Parties in this
Agreement or pursuant hereto shall survive the Closing as hereinafter provided, notwithstanding any
investigation heretofore or hereafter made by or on behalf of any Party and shall not be merged
into any instruments or agreements delivered at Closing but shall terminate on the first
anniversary of the Closing Date; provided, however, that (i) with respect to those covenants and
indemnities contained in, and those representations and warranties covered by, Sections 5.10(a),
Section 7.12, Section 7.13, Section 11.1(a)(ii), Section 11.1(b)(ii), such representations,
warranties, covenants and indemnities shall continue indefinitely, (ii) the representations and
warranties contained in Section 5.5 shall continue until sixty (60) days after the expiration of
the applicable statute of limitations, including any extensions, and (iii) any representation,
warranty or covenant that is the subject of a written notice of claim specifying in reasonable
detail the specific nature of the claim for indemnification hereunder (“Claim Notice”)
delivered in good faith shall survive with respect only to the specific matter described in such
Claim Notice until the earlier to occur of (A) the date on which a final non-appealable resolution
of the matter described in such Claim Notice has been reached or (B) the date on which the matter
described in such Claim Notice has otherwise reached final resolution.

     (c) In no event shall Seller indemnify the Buyer Indemnitees for:

	 	(i)	 	except as otherwise set forth in the proviso to this subsection
11.2(c), any Losses in connection with the transactions contemplated hereby to
the extent that the aggregate amount of all such Losses exceed $10,000,000;
	 
	 	(ii)	 	any Losses unless a Claim Notice with respect thereto has been
delivered to Seller prior to the expiration of the respective survival period
(set forth in Section 11.2(b)) of the representations, warranties or covenants
as to which such Claim Notice relates; or
	 
	 	(iii)	 	except as otherwise set forth in the proviso to this
subsection 11.2(c), any individual Losses not in excess of $25,000 or any
Losses until the Buyer Indemnitees have suffered Losses in the aggregate in
excess of a

35

 

	 	 	 	deductible equal to $350,000, after which point Seller will be
obligated only to indemnify the Buyer Indemnitees from and against further
Losses in excess of such deductible (and only to the extent of any such
excess);

provided, however, that any Losses resulting from the Retained Liabilities or fraud shall not be
subject to any limitation of Seller’s liability set forth in subsections 11.2(c)(i) and
11.2(c)(iii).

     (d) In no event shall Buyer indemnify the Seller Indemnitees for:

	 	(i)	 	except as otherwise set forth in the proviso to this subsection
11.2(d), any Losses in connection with the transactions contemplated hereby to
the extent that the aggregate amount of all such Losses exceed $10,000,000;
	 
	 	(ii)	 	any Losses unless a Claim Notice with respect thereto has been
delivered to Buyer prior to the expiration of the respective survival period
(set forth in Section 11.2(b)) of the representations, warranties or covenants
as to which such Claim Notice relates; or
	 
	 	(iii)	 	except as otherwise set forth in the proviso to this
subsection 11.2(d), any individual Losses not in excess of $25,000 or any
Losses until the Seller Indemnitees have suffered Losses in the aggregate in
excess of a deductible equal to $350,000, after which point Buyer will be
obligated only to indemnify the Seller Indemnitees from and against further
Losses in excess of such deductible (and only to the extent of any such
excess);

provided, however, that any Losses resulting from the Assumed Obligations or fraud shall not be
subject to any limitation of Buyer’s liability set forth in subsections 11.2(d)(i) and
11.2(d)(iii).

     11.3 Notice of Asserted Liability; Opportunity to Defend.

     (a) All claims for indemnification hereunder shall be asserted and handled pursuant to this
Section 11.3. Any person claiming indemnification hereunder is referred to herein as the
“Indemnified Party” or “Indemnitees” and any person against whom such claims are
asserted hereunder is referred to herein as the “Indemnifying Party” or
“Indemnitor.”

     (b) In the event that any Losses are asserted against or sought to be collected from an
Indemnifying Party, the Indemnified Party shall with reasonable promptness provide to the
Indemnifying Party a Claim Notice. The failure to give any such Claim Notice shall not otherwise
affect the rights of the Indemnified Party to indemnification hereunder, provided, however, that,
to the extent the Indemnifying Party is prejudiced thereby, the failure to provide a Claim Notice
to the Indemnifying Party shall relieve the Indemnifying Party from liability for such Losses that
it may have to the Indemnified Party, but only to the extent the liability for such Losses is
directly attributable to such failure to provide the Claim Notice.

     (c) The Indemnifying Party shall have thirty (30) days from the personal delivery or receipt
of the Claim Notice (the “Notice Period”) to notify the Indemnified Party (i) whether or
not it disputes the liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such Losses, and in the event of a dispute, such dispute shall be resolved in the manner

36

 

set forth in Section 12.11 hereof, or (ii) in the case where Losses are asserted against or sought
to be collected from an Indemnified Party by a Third Party (“Third Party Claim”), whether
or not the Indemnifying Party desires at its own sole cost and expense to defend the Indemnified
Party against such Losses in connection with the Third Party Claim; provided however, that any
Indemnified Party is hereby authorized prior to and during the Notice Period to file any motion,
answer or other pleading that it shall deem necessary or appropriate to protect its interests or
those of the Indemnifying Party (and of which it shall have given notice and opportunity to comment
to the Indemnifying Party) and not prejudicial to the Indemnifying Party. In the event

that the Indemnifying Party notifies the Indemnified Party that the Indemnifying Party will
not assume the defense of a Third Party Claim or otherwise fails to assume the defense or
settlement of a Third Party Claim within the Notice Period, the Indemnified Party shall have the
right to undertake the defense, appeal or settlement of such Third Party Claim at the expense and
for the account of the Indemnifying Party; provided, however that the Indemnified Party
shall make no settlement, compromise, admission or acknowledgment that would five rise to liability
on the part of the Indemnifying Party without the prior written consent of the Indemnifying Party.

     (d) In the event that the Indemnifying Party notifies the Indemnified Party within the Notice
Period that it desires to defend the Indemnified Party against Losses in connection with a Third
Party Claim, the Indemnifying Party shall have the right to defend all appropriate proceedings, and
with counsel of its own choosing (but reasonably satisfactory to the Indemnified Party) and such
proceedings shall be promptly settled or prosecuted by them to a final conclusion. If the
Indemnified Party desires to participate in, but not control, any such defense or settlement it may
do so at its sole cost and expense and with counsel of its own choosing. If the Indemnified Party
joins in any such Third Party Claim, the Indemnifying Party shall have full authority to determine
all action to be taken with respect thereto.

     (e) If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Losses in connection with a Third Party Claim
that the Indemnifying Party elects to contest or, if appropriate and related to the claim in
question, in making any counterclaim against the third-party asserting the Losses in connection
with a Third Party Claim, or any cross-complaint against any person. No Third Party Claim may be
settled or otherwise compromised without the prior written consent of the Indemnifying Party.

     (f) At any time after the commencement of defense of any Third Party Claim, the Indemnifying
Party may request the Indemnified Party to agree in writing to the abandonment of such contest or
to the payment or compromise by the Indemnifying Party of the asserted Third Party Claim; provided
that, the Indemnifying Party agrees in writing to be solely liable for all Losses relating to such
Third Party Claim; whereupon such action shall be taken unless the Indemnified Party determines
that the contest should be continued and notifies the Indemnifying Party in writing within fifteen
(15) days of such request from the Indemnifying Party. In the event that the Indemnified Party
determines that the contest should be continued, the amount for which the Indemnifying Party would
otherwise be liable hereunder shall not exceed the amount which the Indemnifying Party had agreed
to pay in payment or consideration of such Third Party Claim; provided that, the other party to the
contested Third Party Claim had agreed in writing to accept such amount in payment or compromise of
the Third Party Claim as of the time the Indemnifying Party made its request therefor to the
Indemnified Party, and further provided that,

37

 

under such proposed compromise, the Indemnified Party
would be fully and completely released from any further liability or obligation with respect to the
matters which are the subject of such contested Third Party Claim.

     11.4 Exclusive Remedy. IN THE ABSENCE OF FRAUD, AS BETWEEN THE BUYER INDEMNITEES AND THE
SELLER INDEMNITEES AFTER CLOSING, THE INDEMNIFICATION
PROVISIONS SET FORTH IN THIS AGREEMENT WILL BE THE SOLE AND EXCLUSIVE RIGHTS, OBLIGATIONS AND
REMEDIES OF THE PARTIES WITH RESPECT TO THIS AGREEMENT, THE EVENTS GIVING RISE TO THIS AGREEMENT,
AND THE TRANSACTIONS PROVIDED FOR HEREIN OR CONTEMPLATED HEREBY. IF THE CLOSING OCCURS, NEITHER
PARTY NOR ANY OF ITS RESPECTIVE SUCCESSORS OR ASSIGNS SHALL HAVE ANY RIGHTS AGAINST THE OTHER PARTY
OR ITS AFFILIATES AFTER THE CLOSING DATE WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT OTHER
THAN AS EXPRESSLY CONTEMPLATED BY THIS AGREEMENT.

     11.5 Negligence and Strict Liability Waiver. WITHOUT LIMITING OR ENLARGING THE SCOPE OF
THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS AGREEMENT, AN INDEMNIFIED PARTY SHALL BE ENTITLED
TO INDEMNIFICATION UNDER THIS AGREEMENT IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER
THE LOSS OR CLAIM GIVING RISE TO SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE,
CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, OR VIOLATION OF ANY LAW OF OR BY SUCH
INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.

     11.6 Exclusion of Materiality. Solely for purposes of this Article XI and notwithstanding
any provision to the contrary in this Agreement, in determining the amount of any Loss resulting
from a breach of a representation or warranty by either Party contained in this Agreement, the
provisions of such representations and warranties that are qualified by “material” or Material
Adverse Effect shall be read and interpreted as if such qualification was not included therein.

     11.7 Certain Seller Indemnification Matters. Notwithstanding anything contained in this
Agreement to the contrary, the indemnification obligations of Seller under Section 11.1(b)(i)
hereof (i) shall apply with respect to Losses incurred by any of the Buyer Indemnitees as a result
of or arising out of the breach of or any inaccuracy in any of the representations, warranties or
covenants of Seller contained in Section 12.6(b), and (ii) such indemnification obligations with
respect to the Losses described in clause (i) of this sentence shall not be subject to any of the
limitations on Seller’s indemnification obligations contained in this Article XI.

ARTICLE XII

MISCELLANEOUS PROVISIONS

     12.1 Expenses. Each of Seller and Buyer will bear its own costs and expenses (including
legal fees and expenses) incurred in connection with the negotiation of this

38

 

Agreement and the
transactions
contemplated hereby. Notwithstanding the foregoing, each Party agrees to share equally the filing
fee for filings, if any, required pursuant to Section 7.9.

     12.2 Further Assurances. From time to time, and without further consideration, each Party
will execute and deliver to the other Party such documents and take such actions as the other Party
may reasonably request in order to more effectively implement and carry into effect the
transactions contemplated by this Agreement. 

     12.3 Buyer Cooperation After Closing. For the period that is the greater of (a) five (5)
years from the Effective Time and (b) the period as may be required by any Legal Requirement or
Governmental Authority for any then pending litigation, Buyer shall permit Seller and its
representatives reasonable access to the Records that are transferred to Buyer in connection
herewith for any proper purpose relating to the Assets, including anticipation of, or preparation
for, existing or future litigation or any Tax audit in which Seller or any of its Affiliates is
involved and which is related to the Assets, during regular business hours and upon reasonable
notice at Buyer’s principal places of business or at any location where the Records are stored;
provided that, (i) any access shall be had or done in a manner so as to not interfere with the
normal conduct of Buyer’s business, (ii) Buyer shall not be required to provide access to any
confidential information, the disclosure of which would violate any statute or regulation or
applicable confidentiality agreement with any Person and (iii) Buyer shall not be required to
provide access to any confidential information, the disclosure of which would cause Buyer or any of
its Affiliates to waive its attorney-client privilege or attorney work product privilege.

     12.4 Seller Cooperation After Closing. For the period that is the greater of (a) five (5)
years from the Effective Time and (b) the period as may be required by any Legal Requirement or
Governmental Authority for any then pending litigation, Seller shall permit Buyer and its
representatives reasonable access to the business records and files of Seller that directly relate
to the Assets, for any proper purpose including anticipation of, or preparation for, existing or
future litigation or any Tax audit in which Buyer or any of its Affiliates is involved and which is
related to the Assets, during regular business hours and upon reasonable notice at Seller’s
principal places of business or at any location where the records or files are stored; provided
that, (i) any access shall be had or done in a manner so as to not interfere with the normal
conduct of Seller’s business, (ii) Seller shall not be required to provide access to any
confidential information, the disclosure of which would violate any statute or regulation or
applicable confidentiality agreement with any Person, and (iii) Seller shall not be required to
provide access to any confidential information, the disclosure of which would cause Seller or any
of its Affiliates to waive its attorney-client privilege or attorney work product privilege.

     12.5 Identification of Buyer’s Property. Seller will cooperate with Buyer in permitting Buyer to place appropriate signs or other notices
on the Assets following the Closing to indicate ownership of such assets by Buyer. Such signs or
other notices shall be purchased and placed at the sole cost of Buyer.

     12.6 Apportionment of Taxes and Recording Fees.

     (a) Ad valorem taxes imposed on or with respect to the Assets for the taxable period that
contains the Closing Date shall be prorated between Seller and Buyer based on the relative

39

 

number
of days prior to and including the Closing Date and after the Closing Date during the taxable
period, with Seller being responsible for such prorated ad valorem taxes for the period prior to
and including the Closing Date and Buyer being responsible for such prorated ad valorem taxes for
the period after the Closing Date. To the extent the ad valorem taxes imposed on or with respect
to the Assets for the taxable period that contains the Closing Date are not finally determined at
the Closing Date, Seller’s prorated ad valorem taxes shall be calculated utilizing any available
final taxable values and tax rates and, to the extent such final taxable values and tax rates are
not determined at Closing, such taxable values and tax rates for the taxable period immediately
preceding the taxable period that contains the Closing Date. Seller’s prorated ad valorem taxes
shall be a deduction from the Purchase Price. Buyer shall be responsible as between Seller and
Buyer for the payment of the total amount of ad valorem taxes imposed on or with respect to the
Assets for the taxable period that contains the Closing Date. Upon receipt of the ad valorem tax
bills for the taxable period that contains the Closing Date, Buyer shall calculate the prorated ad
valorem taxes and shall bill Seller for the amount, if any, by which Seller’s prorated share of
such ad valorem taxes exceeds the estimated amount of such ad valorem taxes paid by Seller as a
deduction from the Purchase Price or shall refund to Seller the amount, if any, by which Seller’s
prorated share of such ad valorem taxes is less than the estimated amount of such ad valorem taxes
paid by Seller as a deduction from the Purchase Price.

     (b) Buyer shall pay the cost of all sales, transfer, use and similar taxes that may arise out
of the transfer of the Assets pursuant to this Agreement (“Transfer Taxes”). Seller agrees
to cooperate with Buyer in connection with the preparation of any Transfer Tax returns and in
obtaining all available exemptions from any applicable Transfer Taxes. Seller represents and
warrants to Buyer that the Assets constitute all of the tangible personal property owned by Seller.

     (c) Buyer shall pay any and all recording, filing or other similar fees relating to the
conveyance or transfer of the Assets from Seller to Buyer.

     12.7 Assignment. The terms, provisions and conditions of this Agreement shall extend to,
be binding upon, and inure to the benefit of the Parties, their respective permitted successors and
assigns. Except as expressly provided in this Agreement, neither Party will make any assignment of
this Agreement or any rights or obligations hereunder without the advance written consent of the
other Party which may be granted or denied in the sole discretion of the non-assigning Party.

     12.8 Entire Agreement, Amendments and Waiver. This Agreement, together with the Transaction Documents and all certificates, documents,
instruments and writings that are delivered pursuant hereto and thereto contain the entire
understanding of the Parties with respect to the transactions contemplated hereby and supersede all
prior agreements, arrangements and understandings relating to the subject matter hereof other than
the Confidentiality Agreement with respect to its subject matter. There are no representations,
restrictions, agreements, promises, warranties, covenants, or undertakings being relied upon by
either Party other than those expressly set forth herein or in the Transaction Documents and the
certificates, documents, instruments and writings that are delivered pursuant hereto and thereto.
This Agreement may be amended, superseded or canceled only by a written instrument duly executed by
the Parties specifically stating that it amends, supersedes or cancels this Agreement. Any of the
terms of

40

 

this Agreement and any condition to a Party’s obligations hereunder may be waived only in
writing by that Party specifically stating that it waives a term or condition hereof. No waiver by
either Party of any one or more conditions or defaults by the other in performance of any of the
provisions of this Agreement shall operate or be construed as a waiver of any future conditions or
defaults, whether of a like or different character, nor shall the waiver constitute a continuing
waiver unless otherwise expressly provided. Notwithstanding anything in this Agreement or any
Conveyance Document to the contrary, in the event of any conflict between the terms of this
Agreement and the terms of any Conveyance Document delivered pursuant to the terms of this
Agreement, this Agreement shall prevail and the terms of this Agreement shall not be merged into or
superceded by the terms of any Conveyance Document.

     12.9 Severability. Each portion of this Agreement is intended to be severable. If any
term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or
invalidity shall not affect the validity of the remainder of this Agreement.

     12.10 Counterparts. This Agreement may be executed simultaneously 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.

     12.11 Governing Law, Dispute Resolution and Arbitration.

     (a) Governing Law. This Agreement shall be governed by, enforced in accordance with,
and interpreted under, the laws of the State of Texas without reference to conflicts of laws
principles.

     (b) Negotiation. In the event of any Arbitrable Dispute, the Parties shall promptly
seek to resolve any such Arbitrable Dispute by negotiations between senior executives of the
Parties who have authority to settle the Arbitrable Dispute. When a Party believes there is an
Arbitrable Dispute under this Agreement, that Party will give the other Party written notice of the
Arbitrable Dispute. Within thirty (30) days after receipt of such notice, the receiving Party
shall submit to the other a written response. Both the notice and response shall include (i) a
statement of each Party’s position and a summary of the evidence and arguments supporting such
position,
and (ii) the name, title, fax number, and telephone number of the executive or executives who
will represent that Party. In the event the Arbitrable Dispute involves a claim arising out of the
actions of any Person not a signatory to this Agreement, the receiving Party shall have such
additional time as necessary, not to exceed an additional thirty (30) days, to investigate the
Arbitrable Dispute before submitting a written response. The executives shall meet at a mutually
acceptable time and place within fifteen (15) days after the date of the response and thereafter as
often as they reasonably deem necessary to exchange relevant information and to attempt to resolve
the Arbitrable Dispute. If one of the executives intends to be accompanied at a meeting by an
attorney, the other executive shall be given at least five (5) Business Days’ notice of such
intention and may also be accompanied by an attorney.

     (c) Failure to Resolve. If the Arbitrable Dispute has not been resolved within sixty
(60) days after the date of the response given pursuant to Section 12.11(b) above, or such
additional time, if any, that the Parties mutually agree to in writing, or if the Party receiving
such notice denies the applicability of the provisions of Section 12.11(b) or otherwise refuses to

41

 

participate under the provisions of Section 12.11(b), either Party may initiate binding arbitration
pursuant to the provisions of Section 12.11(d) below.

     (d) Arbitration. Any Arbitrable Disputes not settled pursuant to the foregoing
provisions shall be resolved through the use of binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (“Arbitration Rules”),
as supplemented to the extent necessary to determine any procedural appeal questions by the Federal
Arbitration Act (Title 9 of the United States Code) and in accordance with the following
provisions:

	 	(i)	 	If there is any inconsistency between this Section 12.11(d) and
the Arbitration Rules or the Federal Arbitration Act, the terms of this Section
12.11(d) will control the rights and obligations of the Parties.
	 
	 	(ii)	 	Arbitration shall be initiated by a Party serving written
notice, via certified mail, on the other Party that the first Party elects to
refer the Arbitrable Dispute to binding arbitration, along with the name of the
arbitrator appointed by the Party demanding arbitration and a statement of the
matter in controversy. Within fifteen (15) days after receipt of such demand
for arbitration, the receiving Party shall name its arbitrator. If the
receiving Party fails or refuses to name its arbitrator within such fifteen
(15) day period, the second arbitrator shall be appointed, upon request of the
Party demanding arbitration, by the Chief U.S. District Court Judge for the
Southern District of Texas or such other person designated by such judge. The
two arbitrators so selected shall within fifteen (15) days after their
designation select a third arbitrator; provided, however, that if the two
arbitrators are not able to agree on a third arbitrator within such fifteen
(15) day period, either Party may request the Chief U.S. District Court Judge
for the Southern District of Texas or such other person designated by such
judge to select the third arbitrator as soon as possible. In the event the
Judge declines to appoint an arbitrator, appointment shall be made, upon
application of either Party, pursuant to the Commercial Arbitration
Rules of the American Arbitration Association. If any arbitrator refuses or
fails to fulfill his or her duties hereunder, such arbitrator shall be
replaced by the Party which selected such arbitrator (or if such arbitrator
was selected by another Person, through the procedure which such arbitrator
was selected) pursuant to the foregoing provisions.
	 
	 	(iii)	 	The hearing will be conducted in Houston, Texas, no later than
sixty (60) days following the selection of the arbitrators or thirty (30) days
after all prehearing discovery has been completed, whichever is later, at which
the Parties shall present such evidence and witnesses as they may choose, with
or without counsel. The Parties and the arbitrators should proceed diligently
and in good faith in order that the award may be made as promptly as possible.

42

 

	 	(iv)	 	Except as provided in the Federal Arbitration Act, the decision
of the arbitrators will be binding on and non-appealable by the Parties. Any
such decision may be filed in any court of competent jurisdiction and may be
enforced by any Party as a final judgment in such court.
	 
	 	(v)	 	The arbitrators shall have no right or authority to grant or
award exemplary, punitive, remote, speculative, consequential (including any
Loss of crude oil throughput on the Pipeline Systems), special or incidental
damages.
	 
	 	(vi)	 	The Federal Rules of Civil Procedure, as modified or
supplemented by the local rules of civil procedure for the U.S. Southern
District Court of Texas, shall apply in the arbitration. The Parties shall
make their witnesses available in a timely manner for discovery pursuant to
such rules. If a Party fails to comply with this discovery agreement within
the time established by the arbitrators, after resolving any discovery
disputes, the arbitrators may take such failure to comply into consideration in
reaching their decision. All discovery disputes shall be resolved by the
arbitrators pursuant to the procedures set forth in the Federal Rules of Civil
Procedure.
	 
	 	(vii)	 	Adherence to formal rules of evidence shall not be required.
The arbitrators shall consider any evidence and testimony that they determine
to be relevant.
	 
	 	(viii)	 	The Parties hereby request that the arbitrators render their decision within
thirty (30) days following conclusion of the hearing.
	 
	 	(ix)	 	The defenses of statute of limitations and laches shall be
tolled from and after the date a Party gives the other Party written notice of
an Arbitrable Dispute as provided in Section 12.11(b) above until such time as
the Arbitrable Dispute has been resolved pursuant to Section 12.11(b), or an
arbitration award has been entered pursuant to this Section 12.11(d).

     (e) Recovery of Costs and Attorneys’ Fees. In the event arbitration arising out of
this Agreement is initiated by either Party, the prevailing Party, after the entry of a final
non-appealable order, shall be entitled to recover from the other Party all court costs, fees and
expenses of such arbitration, including reasonable attorneys’ fees that are specifically included
in the arbitration award.

     (f) Choice of Forum. If, despite the Parties’ agreement to submit any Arbitrable
Disputes to binding arbitration, there are any court proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby, such proceedings shall be brought and tried in
the federal or state courts situated in the City of Austin, County of Travis, State of Texas.

     (g) Jury Waivers. THE PARTIES HEREBY WAIVE ANY AND ALL RIGHTS TO DEMAND A TRIAL BY
JURY.

43

 

     (h) Settlement Proceedings. All aspects of any settlement proceedings, including
discovery, testimony and other evidence, negotiations and communications pursuant to this Section
12.11, briefs and the award shall be held confidential by each Party and the arbitrators, and shall
be treated as compromise and settlement negotiations for the purposes of the Federal and State
Rules of Evidence.

     12.12 Notices and Addresses. Any notice, request, instruction, waiver or other
communication to be given hereunder by either Party shall be in writing and shall be considered
duly delivered if personally delivered, mailed by certified mail with the postage prepaid (return
receipt requested), sent by messenger or overnight delivery service, or sent by facsimile to the
addresses of the Parties as follows:

Buyer:

Sunoco Logistics Partners L.P.

1735 Market Street

Suite LL

Philadelphia, PA 19103-7583

Attention: General Counsel

Telephone: (215) 977-3250

Facsimile: (215) 246-8113

Seller:

Alon Energy USA, Inc

7616 LBJ Freeway, Suite 300

Dallas, TX 75251-1100

Attention: General Counsel

Telephone: (972) 367-3702

Facsimile: (972) 367-3724

or at such other address as either Party may designate by written notice to the other Party in the
manner provided in this Section 12.12. Notice by mail shall be deemed to have been given and
received on the third calendar day after posting. Notice by messenger, overnight delivery service,
facsimile transmission or personal delivery shall be deemed given on the date of actual delivery.

     12.13 Press Releases. Except as may otherwise be required by securities laws and public
announcements or disclosures that are, in the reasonable opinion of the Party proposing to make the
announcement or disclosure, legally required to be made, there shall be no press release or public
communication concerning the transactions contemplated by this Agreement by either Party except
with the prior written consent of the Party not originating such press release or communication,
which consent shall not be unreasonably withheld. Each Party shall have the right to advance review
and approval, which shall not unreasonably be withheld, of any press releases or other publicity to
be issued by the other Party. Buyer and Seller will consult in advance on the necessity for, and
the timing and content of, any communications to be made to the public and, subject to legal
constraints, to the form and content of any application or report to

44

 

be made to any Governmental
Authority that relates to the transactions contemplated by this Agreement.

     12.14 Offset. Nothing contained herein or in any Transaction Document shall create a right
of offset or setoff for any Party, and each Party waives and disclaims any right of offset or
setoff under all applicable Legal Requirement or common law.

     12.15 No Partnership; Third Party Beneficiaries. Nothing in this Agreement shall be deemed
to create a joint venture, partnership, tax partnership, or agency relationship between the
Parties. Nothing in this Agreement shall provide any benefit to any third party or entitle any
third party to any claim, cause of action, remedy or right of any kind, it being the intent of the
Parties that this Agreement shall not be construed as a third-party beneficiary contract; provided,
however, that the indemnification provisions of Article XI shall inure to the benefit of the Buyer
Indemnitees and the Seller Indemnitees as provided therein.

     12.16 Transfer of Records. Promptly as practicable following the Closing Date, Seller will
transfer to Buyer or Buyer’s Affiliates original files, including computer disks or other
electronic media reflecting any books or records, relating to the Assets, including the Records.
If any contracts or agreements are only being partially assigned, Seller will retain the original
files and transfer to Buyer copies of those portions of the files that are applicable to this sale.
Buyer grants to Seller during regular business hours for a period of five (5) years following the
Effective Time reasonable access to the files and materials transferred to Buyer. Seller may
during that period at its expense make such copies thereof as it may reasonably request. Seller’s
access to any materials relating to the period following the Effective Time may be conditioned upon
its execution of a reasonable

confidentiality obligation in favor of Buyer. To the extent that Seller maintains files and
materials relating to the Assets, Seller grants to Buyer during regular business hours for a period
of five (5) years following the Effective Time reasonable access to such files and materials
retained by Seller. Buyer may during that period at its expense make such copies thereof as it may
reasonably request. Buyer’s access to any materials relating to the period following the Effective
Time may be conditioned upon its execution of a reasonable confidentiality obligation in favor of
Seller.

     12.17 Negotiated Transaction. The provisions of this Agreement were negotiated by the
Parties, and this Agreement shall be deemed to have been drafted by both Parties.

[signature page follows]

45

 

          IN WITNESS WHEREOF, the Parties have set their hands by their duly authorized officials as of
the date set forth above.

	 	 	 	 	 
	 	 	ALON PETROLEUM PIPE LINE, LP,
	 	 	by its general partner, APPL GP, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ David Wiessman
	 

	 	 	 	 
	 	 	Name: David Wiessman
	 	 	Title: Chairman
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jeff D. Morris
	 

	 	 	 	 
	 	 	Name: Jeff D. Morris
	 	 	Title: President and CEO
	 
	 	 	 	 
	 	 	SUNOCO PIPELINE L.P., by its general partner,
	 	 	Sunoco Logistics Partners Operations GP LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Deborah M. Fretz
	 

	 	 	 	 
	 	 	Name: Deborah M. Fretz
	 	 	Title: President and Chief Executive Officer

46

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