MEMBERSHIP INTEREST PURCHASE AGREEMENT

LLC Membership Agreement

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Title: MEMBERSHIP INTEREST PURCHASE AGREEMENT
Governing Law: California Date: 8/16/2005
Industry: Business Services Law Firm: Rutan & Tucker, LLP Sector: Services

MEMBERSHIP INTEREST PURCHASE AGREEMENT, Parties: pacific ethanol inc.

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EXHIBIT 10.1

EXECUTION COPY

MEMBERSHIP INTEREST PURCHASE AGREEMENT

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TABLE OF CONTENTS

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ARTICLE 1 PURCHASE AND SALE OF MEMBERSHIP INTERESTS.....................................................1

1.1 Acquisition...................................................................................1

1.2 Assignment of Membership Interests............................................................1

ARTICLE 2 PURCHASE PRICE................................................................................1

2.1 Purchase Price................................................................................1

2.2 Warrants......................................................................................2

2.3 Transfer Taxes................................................................................2

2.4 Purchase Price Adjustments....................................................................2

2.5 Pro Rata Payments.............................................................................4

ARTICLE 3 SELLERS' REPRESENTATIONS AND WARRANTIES.......................................................4

3.1 Organization..................................................................................4

3.2 Power and Authority...........................................................................4

3.3 Authorization; No Breach......................................................................5

3.4 Absence of Undisclosed Liabilities............................................................5

3.5 Capitalization of the Company and Title to Membership Interests...............................6

3.6 Financial Statements..........................................................................6

3.7 No Material Adverse Changes; Absence of Certain Changes or Events.............................6

3.8 Real Property; Personal Property..............................................................8

3.9 Tax Matters..................................................................................10

3.10 Contracts and Commitments....................................................................11

3.11 Litigation; Proceedings......................................................................13

3.12 Brokerage....................................................................................14

3.13 Employees....................................................................................14

3.14 Employee Benefit Plans.......................................................................15

3.15 Compliance with Laws.........................................................................17

3.16 Environmental Matters........................................................................17

3.17 Affiliate Transactions.......................................................................18

3.18 Intellectual Property Rights.................................................................19

3.19 Bank Accounts; Powers of Attorney............................................................19

3.20 Fuel Volume Records..........................................................................19

3.21 Intentionally Omitted........................................................................19

3.22 Intentionally Omitted........................................................................19

3.23 Accuracy of Representations..................................................................19

3.24 Foreign Person...............................................................................19

3.25 Securities Law Compliance....................................................................20

ARTICLE 4 BUYER'S REPRESENTATIONS AND WARRANTIES.......................................................21

4.1 Organization.................................................................................21

4.2 Power and Authority..........................................................................21

4.3 Authorization; No Breach.....................................................................21

4.4 Brokerage....................................................................................21

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4.5 Litigation...................................................................................21

4.6 Buyer's Investment Representation............................................................21

4.7 Buyer's Securities Filings...................................................................22

ARTICLE 5 COVENANTS....................................................................................22

5.1 Pre-Closing Affirmative Covenants of Sellers.................................................22

5.2 Schedules....................................................................................23

5.3 Intentionally Omitted........................................................................23

5.4 Access.......................................................................................23

5.5 Pre-Closing Negative Covenants of Sellers....................................................23

5.6 Lot Split. .................................................................................25

ARTICLE 6 CLOSING CONDITIONS - BUYER...................................................................25

6.1 Buyer's Conditions to Closing................................................................25

6.2 Waiver of Conditions.........................................................................27

ARTICLE 7 CLOSING CONDITIONS - SELLERS.................................................................27

7.1 Conditions to Closing........................................................................27

7.2 Waiver of Conditions.........................................................................29

ARTICLE 8 CLOSING MATTERS..............................................................................29

8.1 The Closing..................................................................................29

8.2 Action to Be Taken at the Closing; Payment of Purchase Price.................................29

8.3 Closing Documents............................................................................29

ARTICLE 9 INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES; RELEASE.........................30

9.1 Indemnification of Buyer and the Company.....................................................30

9.2 Indemnification of Sellers...................................................................32

9.3 Certain Tax Matters..........................................................................32

9.4 Procedure....................................................................................33

9.5 Survival ....................................................................................36

9.6 Exclusive Remedy.............................................................................36

9.7 Indemnification Limitations..................................................................36

9.8 The Sellers' Representative..................................................................37

9.9 Release......................................................................................39

9.10 No Contribution..............................................................................40

ARTICLE 10 TERMINATION..................................................................................40

10.1 Termination..................................................................................40

10.2 Effect of Termination........................................................................40

ARTICLE 11 ADDITIONAL AGREEMENTS........................................................................40

11.1 Press Release and Announcements..............................................................40

11.2 Confidentiality by Buyer.....................................................................41

11.3 Remittances..................................................................................41

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11.4 Cooperation to Obtain Consents...............................................................41

11.5 Tax Matters..................................................................................41

11.6 Employee Matters.............................................................................42

11.7 Further Assurances...........................................................................42

11.8 Arbitration..................................................................................42

11.9 Confidentiality, Tradenames..................................................................44

11.10 SEC Reporting Cooperation....................................................................45

11.11 Legend; Transfer of Member Notes.............................................................45

11.12 No Shop. ".................................................................................46

ARTICLE 12 MISCELLANEOUS................................................................................46

12.1 Amendment and Waiver.........................................................................46

12.2 Notices......................................................................................47

12.3 Assignment...................................................................................47

12.4 Captions.....................................................................................48

12.5 Complete Agreement; Schedules and Exhibits...................................................48

12.6 Governing Law................................................................................48

12.7 Counterparts.................................................................................48

12.8 Third Party Beneficiaries....................................................................48

12.9 Severability.................................................................................48

12.10 Expenses.....................................................................................48

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INDEX OF DEFINITIONS

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OTHER THAN THOSE LIST ON EXHIBIT "A"

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Accounting Firm.................................................................................................3

Acquisition Proposal...........................................................................................46

Action.........................................................................................................43

Agreement.......................................................................................................1

Benefit Plans..................................................................................................15

Business........................................................................................................1

Business Employees.............................................................................................14

Buyer...........................................................................................................1

Buyer Securities................................................................................................2

Closing........................................................................................................28

Closing Balance Sheet...........................................................................................3

Closing Date...................................................................................................29

Company.........................................................................................................1

Company Intellectual Property..................................................................................18

Confidential Information.......................................................................................43

Decision.......................................................................................................43

Effective Time.................................................................................................29

Financial Statements............................................................................................6

Indemnifying Party.............................................................................................33

Insurance Policies.............................................................................................12

Interim Unaudited Statements....................................................................................6

JAMS...........................................................................................................42

Lease...........................................................................................................8

Leases..........................................................................................................8

Loss...........................................................................................................31

Material Contracts.............................................................................................12

Member Notes....................................................................................................2

Membership Interests............................................................................................1

MetLife Note....................................................................................................2

Milestone Date.................................................................................................29

Monthly Unaudited Statements....................................................................................6

Net Tax Benefit................................................................................................35

Net Working Capital.............................................................................................2

Notice.........................................................................................................33

Offset.........................................................................................................31

Offset Notice..................................................................................................31

Pension Plans..................................................................................................15

Permits........................................................................................................17

Personal Property...............................................................................................9

Primary Sellers................................................................................................32

Principals......................................................................................................4

Purchase Price..................................................................................................1

Seller..........................................................................................................1

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Sellers.........................................................................................................1

Sellers' Representative....................................................................................36, 37

Tax Matters....................................................................................................32

Tax Reimbursement Amount.......................................................................................35

To the Best of Sellers' Knowledge...............................................................................4

Transaction Documents..........................................................................................29

Unaudited Statements............................................................................................6

Warrants........................................................................................................2

Welfare Plans..................................................................................................15

Western Milling.................................................................................................2

Western Milling Loan............................................................................................2

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EXECUTION COPY

MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (together with the exhibits

and schedules hereto, this "AGREEMENT") is dated as of August 1, 2005 by and

among those persons and entities listed on the attached Schedule 1 (collectively

the "Sellers" or individually the "SELLER" and PACIFIC ETHANOL, INC., a Delaware

corporation ("BUYER"). Unless otherwise defined in this Agreement, capitalized

terms used in this Agreement are defined in EXHIBIT "A".

R E C I T A L S

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A. Sellers own 100% of the equity (the "MEMBERSHIP INTERESTS") of

Phoenix Bio Industries, LLC, a California limited liability Company (the

"COMPANY").

B. The Company is engaged in the business (the "BUSINESS") of

developing and constructing an approximate 25 million gallon per year corn

ethanol plant, providing management services to operate the corn ethanol plant

and such other activities related to the foregoing.

C. Buyer desires to acquire from Sellers, and Sellers desire to sell

and transfer to Buyer, all of the Membership Interests on the terms and subject

to the conditions set forth herein.

A G R E E M E N T

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THEREFORE, in consideration of the foregoing and the mutual agreements

and covenants set forth below, the Parties hereby agree as follows:

ARTICLE 1

PURCHASE AND SALE OF MEMBERSHIP INTERESTS

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1.1 ACQUISITION. Subject to the terms and conditions of this Agreement,

Buyer agrees to purchase, and Sellers agree to sell, convey, assign, transfer

and deliver to Buyer, the Membership Interests, free and clear of all

Encumbrances, on the Closing Date.

1.2 ASSIGNMENT OF MEMBERSHIP INTERESTS. The sale and transfer of the

Membership Interests will be effected by delivery by Sellers to Buyer of an

Assignment of Limited Liability Company Membership Interests in the form

attached hereto as EXHIBIT "B".

ARTICLE 2

PURCHASE PRICE

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2.1 PURCHASE PRICE. The aggregate amount to be paid by the Buyer at the

Closing in consideration for the Membership Interests shall be Forty-Seven

Million Five Hundred Thousand Dollars ($47,500,000.00) (the "PURCHASE PRICE").

Subject to SECTION 2.4(G) of this Agreement, the Purchase Price shall be payable

as follows:

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(a) $39,500,000 shall be payable at the time of the Closing in

the form of (i) the assumption by Buyer or payoff by Buyer of the

remaining balance of the MetLife Loan to the Company in the original

principal amount of $8,000,000 (the "METLIFE NOTE"); (ii) payment in

the form of wire transfer, check or bank draft in the amount of

$39,500,000 reduced by the amount of the MetLife Note assumed by or

paid off from Sellers' proceeds paid at the time of this Closing and

the outstanding balance of the loan made by Western Milling, LLC

("WESTERN MILLING") to the Company with a current principal amount

owing of approximately $1,000,000 (the "WESTERN MILLING LOAN") which

will be paid off from Seller's proceeds paid at the time of this

Closing.

(b) Buyer shall issue an aggregate of $8,000,000 of

convertible subordinated notes to the Sellers (the "MEMBER NOTES") in

the form attached hereto as EXHIBIT "C" which will be secured by a

subordinated security interest in the form of a deed of trust

encumbering the Facility and the ground lease upon which it is located

junior only to one or more deeds of trust securing an aggregate amount

not to exceed $37,500,000.

2.2 WARRANTS. As additional consideration for the acquisition of the

Membership Interests, Buyer shall issue at Closing warrants to the Sellers

("WARRANTS") in the form attached hereto as EXHIBIT "D". The Warrants and the

Member Notes are hereinafter collectively referred to as the "BUYER SECURITIES".

2.3 TRANSFER TAXES. All transfer, registration, stamp, documentary,

recording and similar taxes, if any, that become due and payable as a result of

the consummation of the transactions set forth in this Agreement shall be paid

one-half by the Buyer and one-half by the Sellers.

2.4 PURCHASE PRICE ADJUSTMENTS.

(a) As used herein, the term "NET WORKING CAPITAL" shall mean

the aggregate current assets of the Company minus the aggregate current

liabilities of the Company, all as determined in accordance with

generally accepted accounting principles, consistent with past practice

and all as determined as of the Effective Time and taking into account

such adjustments as customary for a working capital adjustment. Current

liabilities will not include any principal portion of the Met Life loan

or the Western Milling Loan.

(b) The Purchase Price shall be adjusted by the amount of the

Net Working Capital of the Company as of the Effective Time. The

Sellers' Representative and the Buyers shall use commercially

reasonable efforts to mutually agree upon the principles,

specifications and methodologies for determining Net Working Capital

consistent with past practice. In the event that the Parties cannot

mutually agree on the principles, specifications and methodologies for

determining Net Working Capital, on or before 5 business days prior to

the Closing, then the matter shall be submitted to binding arbitration

with a mutually agreed upon national independent certified public

accounting firm.

shall deliver to Buyer a reasonable estimate of Net Working Capital as

of the Effective Time based on a balance sheet as of the last day of

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the most recently ended calendar month prior to the Closing Date and

containing reasonable detail and supporting documents showing the

derivation of such estimate, including a projected balance sheet as of

the Effective Time (the "CLOSING BALANCE Sheet"). The consideration

paid by Buyer to the Sellers at the Closing shall be (x) increased by

the excess, if any, of Net Working Capital (above zero) as of the

Effective Time, or (y) decreased by the shortfall (below zero), if any,

of Net Working Capital as of the Effective Time, in either case as

reasonably agreed to by Buyer and the Sellers' Representative on or

prior to the Closing Date.

(d) Within ninety (90) days after the Closing, Buyer shall

deliver to the Sellers' Representative its determination of the actual

Net Working Capital as of the Effective Time (following the same

principles, specifications and methodologies used to determine the

estimated Net Working Capital as agreed upon pursuant to SECTION

2.3(B)). Each party shall have full access to the financial books and

records pertaining to the Company to confirm or audit the Net Working

Capital computations. Should the Sellers' Representative disagree with

Buyer's determination of Net Working Capital, the Sellers'

Representative shall notify Buyer within thirty (30) days after Buyer's

delivery of its determination of Net Working Capital. If the Sellers'

Representative and Buyer fail to agree within thirty (30) days after

Sellers' Representative's delivery of notice of disagreement on the

amount of Net Working Capital, such disagreement shall be resolved in

accordance with the procedure set forth in SECTION 2.3(F) which shall

be the sole and exclusive remedy for resolving such accounting disputes

relative to the determination of Net Working Capital.

(e) If the actual Net Working Capital as of the Effective Time

(determined pursuant to SECTION 2.3(D)) exceeds the estimated Net

Working Capital as of such time (determined pursuant to SECTION 2.3(C)

hereof), then Buyer shall, within fourteen (14) days pay such

difference in cash to the Sellers' Representative, and the Sellers'

Representative shall distribute the same to the Sellers in proportion

to their ownership interests in the Company. If the actual Net Working

Capital as of the Effective Time (determined pursuant to SECTION

2.3(D)) is less than the estimated Net Working Capital as of such time

(determined pursuant to SECTION 2.3(C) hereof), then the Buyer shall

reduce the difference from the subsequent payment(s) due on the Member

Notes.

(f) In the event that the Sellers' Representative and Buyer

are not able to agree on the actual Net Working Capital as of the

Effective Time within thirty (30) days after the Sellers'

Representative's delivery of notice of disagreement, the Sellers'

Representative and Buyer shall each have the right to require that such

disputed determination be submitted to a national independent certified

public accounting firm as the Sellers' Representative and Buyer may

then mutually agree upon in writing (the "ACCOUNTING FIRM") for

computation or verification in accordance with the provisions of this

Agreement. The Accounting Firm shall review the matters in dispute and

acting as arbitrators shall promptly decide the proper amounts of such

disputed entries (which decision shall also include a final calculation

of the actual Net Working Capital as of the Effective Time). The

submission of the disputed matter to the Accounting Firm shall be the

exclusive remedy for resolving accounting disputes relative to the

determination of Net Working Capital. The Accounting Firm's

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determination shall be binding upon the Sellers, the Sellers'

Representative and Buyer. The Accounting Firm's fees and expenses shall

be borne equally by the Sellers and Buyer.

(g) Any Purchase Price Adjustment required under this SECTION

2.3 shall be made to the cash portion of the Purchase Price which is

payable pursuant to SECTION 2.1 of this Agreement.

2.5 PRO RATA PAYMENTS. All payments due the Sellers under this Article

2 and the other provisions of this Agreement shall be made by the Buyer to the

Sellers according to Schedule 1 attached hereto. Schedule 1 may be adjusted up

to the Closing.

ARTICLE 3

SELLERS' REPRESENTATIONS AND WARRANTIES

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For the purposes of this Agreement, the phrase "TO THE BEST OF SELLERS'

KNOWLEDGE" shall mean (a) as to all the representations and warranties contained

in this ARTICLE 3 other than SECTIONS 3.2, 3,3(A), 3.5(A), 3.5(C) AND 3.25 to

the actual knowledge of Mark S. Wheeler, Kevin Kruse, Ejnar Knudsen and Rick

Eastman (collectively the "PRINCIPALS") and shall be deemed to exist with

respect to a particular matter if a prudent individual would be expected to

discover or otherwise become aware of it after reasonable inquiry; and (b) as to

the representations and warranties contained in SECTIONS 3.2, 3.3(A), 3.5(A),

3.5(C) AND 3.25 of this ARTICLE 3, to the actual knowledge of each Seller as

such representation or warranty relates to such Seller and shall be deemed to

exist with respect to a particular matter if a prudent individual would be

expected to discover or otherwise become aware of it after reasonable inquiry.

Subject to the foregoing and as an inducement to Buyer to enter into this

Agreement, Sellers represent and warrant to Buyer severally as to the

representations and warranties contained in SECTIONS 3.2, 3.3(A), 3.5(A), 3.5(C)

AND 3.25 and each of the Principals represents and warrants as to all other

representations and warranties in this Article 3 that:

3.1 ORGANIZATION. The Company is a limited liability company duly

organized, validly existing and in good standing under the Laws of California.

The Company has no Subsidiaries nor does it own any equity interest in any other

entity. The Company is qualified to do business as a foreign corporation in any

state in which it is doing business and is in good standing in the State of

California. The State of California is the only jurisdiction where the Company's

activities, personnel and properties require such qualification or licensing.

Sellers have provided to Buyer complete and correct copies of the Charter

Documents for the Company as currently in effect.

3.2 POWER AND AUTHORITY. Sellers have full power and authority to own

the Membership Interests, to execute and deliver this Agreement and the

Transaction Documents and to perform their respective obligations hereunder and

thereunder. Except as set forth in SCHEDULE 3.2, the Company has all requisite

power and authority to own and operate the Business as conducted as of the date

hereof, and to own, operate and lease the properties and assets owned, operated

or leased by the Company and used in the Business.

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3.3 AUTHORIZATION; NO BREACH.

(a) The execution, delivery and performance of this Agreement

has been, and the execution, delivery and performance of the

Transaction Documents as of the Closing will have been, duly and

validly authorized by Sellers, and this Agreement constitutes, and each

of the Transaction Documents as of the Closing will constitute, a valid

and binding obligation of Sellers, enforceable against Sellers in

accordance with their respective terms (except as may be limited by

bankruptcy, insolvency, reorganization and other similar laws and

equitable principles relating to or limiting creditors' rights

generally).

(b) The execution, delivery and performance of this Agreement

and the Transaction Documents by Sellers, and the consummation of the

transactions hereunder and thereunder, will not:

(i) violate, conflict with, result in a breach or

constitute a default, or give rise to any right of amendment,

termination, cancellation or acceleration, under (with or

without due notice or lapse of time, or both) the Company's

Charter Documents, or, To the Best of Sellers' Knowledge, any

Law to which Sellers or the Company are subject or, except as

set forth on SCHEDULE 3.3(A), any agreement to which the

Company is party or otherwise bound (including the Material

Contracts);

(ii) except as set forth on SCHEDULE 3.3(B), result

in or give to any person any right of termination or

cancellation in or with respect to any Permit; or

(iii) except as set forth on SCHEDULE 3.3(C), require

or potentially require any authorization, consent or approval

of, or action or filing with, any person, business

organization, entity or any court or other governmental body.

3.4 ABSENCE OF UNDISCLOSED LIABILITIES.

(a) Other than as disclosed on the Company's financial

statement dated June 30th 2005 and updated at Closing on SCHEDULE

3.4(A), the Company does not have any liabilities or obligations of any

nature, whether accrued or absolute, contingent or otherwise, and

whether due or to become due, except (i) liabilities and obligations

under contracts described on the Leases Schedule and the Contracts

Schedule (other than through any breach or default by the Company, (ii)

liabilities and obligations reflected in the Unaudited Statements, and

(iii) liabilities and obligations of the Company which have arisen

after June 30th 2005 in the ordinary course of business, consistent

with past practices (other than through any breach or default by the

Company).

(b) Except as set forth on SCHEDULE 3.4(B), the Company does

not have any Funded Indebtedness as of the date of this Agreement or on

the Closing Date.

3.5 CAPITALIZATION OF THE COMPANY AND TITLE TO MEMBERSHIP INTERESTS.

(a) Sellers are the unconditional and sole legal, beneficial,

record and equitable owners of the Membership Interests, and each has

full power and authority to sell and transfer the Membership Interests

free and clear of all Encumbrances. SCHEDULE 1 lists the name of each

Seller and the percentage of the Membership Interests each Seller owns

of record.

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(b) The Membership Interests constitute all of the issued and

outstanding equity in the Company. All such Membership Interests are

duly authorized, validly issued, fully paid and non-assessable and were

issued in conformity with applicable Laws.

outstanding warrants, options, rights, other securities, agreements,

subscriptions, or other commitments, arrangements or undertakings

pursuant to which Sellers, the Company, or any other person is or may

become obligated to issue, deliver or sell, or cause to be issued,

delivered or sold, any additional membership interests or other

securities of the Company.

3.6 FINANCIAL STATEMENTS. The Company has delivered to Buyer, or, in

the case of the Interim and Monthly Unaudited Statements, will deliver to Buyer

prior to Closing, correct and complete copies of (a) unaudited financial

statements with respect to the Company and the Business prepared by the Company

for the year ended December 31, 2004 and December 31, 2003 (the "UNAUDITED

STATEMENTS"), (b) unaudited statements of income and cash flow for the Company

for the six (6) month period ending June 30, 2004 (the " INTERIM UNAUDITED

STATEMENTS") and each month-end that occurs prior to the Closing Date (the

"Monthly UNAUDITED STATEMENTS"). The Unaudited Statements, the Interim Unaudited

Statements and the Monthly Unaudited Statements are hereinafter collectively

referred to as the "FINANCIAL STATEMENTS". The Financial Statements have been

(and, with respect to the Monthly Unaudited Statements, will be) prepared in

accordance with the books and records of the Company and consistently applied

throughout the periods involved, and fairly present the financial condition and

results of operation of the Company and the Business as of such balance sheet

date or the period then ending, as the case may be. Except as set forth on

SCHEDULE 3.6, each of the Company's accounts receivable arose, and all accounts

receivable that will be outstanding as of the Closing Date shall have arisen,

from bona fide transactions in the ordinary course of business. The reserves for

accounts receivables set forth in the Financial Statements have been established

consistently with the Company's historical accounting practices. SCHEDULE 3.6

includes an accurate list, as of a date not more than five (5) business days

prior to the date hereof, of the Company's accounts receivable, showing amounts

due in 30-day aging categories.

3.7 NO MATERIAL ADVERSE CHANGES; ABSENCE OF CERTAIN CHANGES OR EVENTS.

Since June 30th, 2005, except as set forth in SCHEDULE 3.7 or as contemplated or

permitted hereunder, (i) there has not been any Material Adverse Change, (ii)

the Business has only been operated in the ordinary course, consistent with past

practices, and (iii) there has not been, with respect to the Company, any:

(a) sale, assignment or transfer, other than in the ordinary

course of business and consistent with past practice, of any assets of

the Company;

(b) acquisition by merger, consolidation with, purchase of

substantially all of the assets or capital stock of, or, other than in

the ordinary course of business and consistent with past practice, any

other acquisition of any material assets of, any corporation,

partnership, association or other business organization or division

thereof;

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the Company other than what is required to facilitate the Company's

transition from construction to operating;

(d) termination or, other than in the ordinary course of

business and consistent with past practice, entry into, or amendment or

modification of, any Material Contract, Permit or material transaction

(including, without limitation, any borrowing, capital expenditure,

capital contribution, capital financing or factoring agreement);

(e) increase in salary, bonuses or other compensation payable

or to become payable to, or any advance or loan to any officer or

employee of the Company, except in the ordinary course of business,

consistent with past practice, and the Company has not (i) entered into

any Benefit Plan, employment, severance, or other agreements relating

to compensation or fringe benefits or (ii) adopted or changed any

existing Benefit Plan or Benefit Arrangement;

(f) strike, walkout, labor trouble or, To the Best of Sellers'

Knowledge, any other new or continued labor-related event, development

or condition of any character which has or could materially adversely

affect the Business;

(g) cancellation or waiver of any right material to the

operation of the Business or any cancellation or waiver of any debts or

claims of substantial value or any cancellation or waiver of any debts

or claims against any officer, manager or employee of the Company;

(h) payment, discharge or satisfaction of any material

liability or obligation (whether accrued, absolute, contingent or

otherwise), other than the payment, discharge or satisfaction of

liabilities and obligations under contracts described in the Leases

Schedule and the Contracts Schedule, in accordance with the terms of

such contracts, and other than the payment, discharge or satisfaction,

in the ordinary course of business, of liabilities or obligations shown

or reflected on the Financial Statements or incurred in the ordinary

course of business since June 30th, 2005;

(i) To the Best of Sellers' Knowledge, change or changes in

relations with landlords, suppliers, clients or customers which,

individually or in the aggregate, could reasonably be expected to

result in a Material Adverse Change;

(j) write-offs as uncollectible of any notes or accounts

receivable of the Company or write-downs of the value of any asset or

inventory by the Company other than in immaterial amounts or in the

ordinary course of business consistent with past practice;

(k) creation, incurrence, assumption or guarantee by the

Company of any material obligations or liabilities (whether absolute,

accrued, contingent or otherwise and whether due or to become due),

except in the ordinary course of business, or any creation, incurrence,

assumption or guarantee by the Company of any indebtedness for borrowed

money; or

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(l) agreement by the Company to do any of the foregoing.

3.8 REAL PROPERTY; PERSONAL PROPERTY.

(a) The Leases Schedule, SCHEDULE 3.8(A), lists all oral or

written leases, including the Ground Lease, subleases, licenses,

concession agreements or other use or occupancy agreements pursuant to

which the Company leases to or from any other party any real property,

including all renewals, extensions, modifications or supplements to any

of the foregoing or substitutions for any of the foregoing (each a

"LEASE" and collectively, the "LEASES"). The Leases are in full force

and effect, have not been assigned, modified, supplemented or amended,

and are enforceable by and against the Company and, To the Best of

Sellers' Knowledge, all other parties thereto. Sellers have delivered

to Buyer complete and accurate copies of each of the Leases (including

all amendments and supplements thereto and, To the Best of Sellers'

Knowledge, all material correspondence related thereto). Copies of the

Ground Lease are attached to SCHEDULE 3.8(A) hereto. Except as set

forth on SCHEDULE 3.8(A), (i) none of Sellers, nor the Company has

received any notice that the Company is in default under, or not in

compliance with any material provision of, any Lease, that the Company

may be subject to any special assessments or that there may be any

material changes in property Tax or land use law affecting any such

Leases, (ii) none of the Sellers or the Company has delivered any

notice to another party alleging any default under, or failure to

comply with any material provision of any Lease, and (iii) no event has

occurred that, with notice, the passage of time or both would

constitute a material default by the Company under, or failure of the

Company to comply with a material provision of, any of the Leases, or,

To the Best of Sellers' Knowledge, otherwise give any party a right of

termination or material modification thereof.

(b) The Company's interests under the Leases are held free and

clear of all Encumbrances other than as set forth on SCHEDULE 3.8(B).

There are no mortgages, security interests or liens granted with

respect to the Ground Lease other than as set forth on SCHEDULE 3.8(B).

The Company does not own any fee interest in any real property. The

Company has no leasehold rights in any other real property.

(i) None of Sellers nor the Company has received

written notice of any threatened condemnation proceedings,

lawsuits or administrative actions relating to any of the real

property used in the Business, or any other matters which do

and may have a material adverse effect on the current use or

occupancy thereof, and there are no pending or, To the Best of

Sellers' Knowledge, there are no pending or threatened

condemnation proceedings, lawsuits or administrative actions

relating to any of the real property used in the Business or

any other matters which do or may have a material adverse

effect on the current use and occupancy thereof.

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(ii) All facilities, buildings, improvements and

other structures located on the real property used in the

Business and all present uses and operations of such real

property and the structures by the Company, comply in all

material respects To the Best of Sellers' Knowledge with all

applicable zoning, land-use, building, fire, labor, safety,

subdivision and other governmental requirements and all deed

or other title covenants or restrictions applicable thereto.

None of Sellers nor the Company has received any notice that

any of the leased real property or any of the structures used

in the Business, or the use, occupancy or operation thereof by

the Company, violate any governmental requirements or deed or

other title, covenants or restrictions, except for any

violations which do not have a material adverse effect.

(iii) By Closing, the Company will have obtained all

material approvals of governmental authorities (including

certificates of use and occupancy, licenses and permits)

required in connection with the construction, ownership, use,

occupation and operation of the leased real property and the

structures thereon used in the Business, and all equipment

owned or used by the Company. To the Best of Sellers'

Knowledge, none of the leased real property or any of the

structures thereon used in the Business are dependent upon or

benefit from any "non-conforming use" or similar zoning

classification.

(iv) Other than in the ordinary course of business or

as may be provided in any Lease or Material Contract, there

are no parties other than the Company in possession of any of

the leased real property or any portion thereof, and, except

as may be provided in any Lease or Material Contract or

otherwise in the ordinary course of business, there are no

leases, subleases, licenses, concessions or other agreements,

written or oral, granting to any party or parties the right of

use or occupancy of any of the leased real property or any

portion thereof.

(v) To the Best of the Sellers' Knowledge, all

structural, mechanical and other physical systems related to

the leased real property are in operating condition and repair

at Closing, reasonable wear and tear excepted, in all material

respects.

accurate list of all furniture, equipment, leasehold improvements,

motor vehicles and all other tangible personal property owned or leased

by the Company that the Company has reflected in its books and records

in accordance with generally accepted accounting principles (the

"PERSONAL PROPERTY").

(d) The Company has good title to its Personal Property, free

and clear of any Encumbrances except as set forth on SCHEDULE 3.8(D).

(e) The Personal Property has been maintained, repaired and

replaced in the ordinary course of business consistent with past

practices, and is in operating order except for ordinary wear and tear.

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<PAGE>

The Company owns or leases all assets and properties that are used in

or necessary to the operation of the Business it is currently

conducted.

(f) At Closing, the Company's inventory consists of items of a

quality and quantity usable and salable in the ordinary course of

business.

3.9 TAX MATTERS. Except as set forth on SCHEDULE 3.9:

(a) The Company has filed (or had filed on its behalf), all

Tax Returns required to have been filed by it. The Company has duly

paid (or had paid on its behalf) all Taxes required to have been paid

by it. With respect to the Company, no claim has ever been made by a

governmental authority in a jurisdiction where the Company does not

file Tax Returns that the Company is or may be subject to taxation by

that jurisdiction. The Company has not requested or obtained any

extension of time within which to file any Tax Return, which Tax Return

has not since been filed. There are no Liens on any of the assets of

the Company that arose in connection with any failure (or alleged

failure) to pay any Tax.

(b) The Company has complied in all material respects with all

applicable laws, rules and regulations relating to withholding Taxes,

and has, within the time and manner prescribed by law, withheld and

paid, when due (or if withheld but not yet due, have made adequate

reserves in the Unaudited Statements with for) all Taxes from payments

made to its employees, agents, and contractors as required by Law.

or audit pending or threatened by any governmental authority with

respect to any Taxes or Tax Returns of the Company. To the Best of

Sellers' Knowledge, there are no existing circumstances which, if known

to governmental authorities, reasonably may be expected to result in

the assertion of any claim for Taxes against the Company by any

governmental authority with respect to any period for which Tax Returns

have been filed or Tax is required to have been paid by or with respect

to the Company.

(d) The Company (or any Affiliate of the Company, with respect

to the Company) has not received a written ruling from a governmental

authority relating to any Tax or entered into a written agreement with

a governmental authority relating to any Tax that could have a

continuing effect with respect to any taxable period for which such

Company has not filed a Tax Return.

(e) The Company (or any Affiliate of the foregoing with

respect to the Company) has not waived any statute of limitations with

respect to any Tax or Tax Return or agreed to any extension of time

with respect to a Tax assessment or deficiency, which has continuing

effect.

(f) The Company is not nor has it been a party to any Tax

allocation, Tax sharing or similar agreement or arrangement, has been

member of a group of entities required to file Tax Returns on a

combined, consolidated or unitary basis, or has any liability for Taxes

owing by any other person, including, without limitation, by contract

or as a transferee or successor of such other person by merger or

otherwise.

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(g) No property of the Company is property that the Company or

any party to this transaction is or will be required to treat as being

owned by another person pursuant to the provisions of Section 168(f)(8)

of the Code (as in effect prior to its amendment by the Tax Reform Act

of 1986) or is "tax-exempt use property" within the meaning of Section

168 of the Code.

(h) The Sellers have provided to the Buyer complete and

accurate copies of all of the following materials: (i) all income Tax

Returns of the Company, (ii) all examination reports of the Company

relating to Taxes, (iii) all statements of Taxes assessed against or

agreed to by the Company, (iv) all written rulings the Company (or any

Affiliate of the foregoing with respect to the Company) received from

any governmental authority relating to any Tax, and (v) all written

agreements entered into by or on behalf of the Company with any

governmental authority relating to any Tax. SCHEDULE 3.9 identifies all

Tax Returns that the Company has filed and the taxable period covered

by each such Tax Return, and identifies those Tax Returns or periods

that have been audited or are currently the subject of an audit by a

governmental authority.

(i) Since the date of its formation, for federal income Tax

purposes, the Company has properly been treated as a partnership

pursuant to Treas. Reg. Section 301.7701-3(b)(1)(i).

3.10 CONTRACTS AND COMMITMENTS.

(a) Except as set forth in the Contracts Schedule, SCHEDULE

3.10, the Company is not a party to any contract or agreement, written

or oral:

(i) for a bonus, pension, profit sharing, retirement,

deferred compensation, medical or life insurance plan,

membership purchase or option or any other plans or

arrangements providing for benefits of any type to employees

(either current or former) of the Company;

(ii) for collective bargaining or with any labor

union;

(iii) for the borrowing of money or mortgaging,

pledging or encumbering any of the Company's assets;

(iv) for the lending or investing of funds to or in

other persons or entities;

(v) granting any power of attorney (irrevocable or

otherwise) to any person for any purpose relating to the

Business or the Company's assets, other than powers of

attorney given to regulatory authorities in connection with

routine qualifications to do business; or

(vi) with an Affiliate of any of Sellers or the

Company (other than the Company's Charter Documents).

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<PAGE>

(b) The Contracts Schedule lists each of the Material

Contracts. For purposes of this Agreement, "MATERIAL CONTRACTS"

includes the following:

(i) any and all contracts for the sale of goods or

services by the Company with a value in excess of $25,000

individually or $100,000 in the aggregate, or which is not

terminable without penalty by or on behalf of the Company on

less than ninety (90) days notice;

(ii) any and all contracts, agreements, licenses,

leases (other than the Leases), sales and purchase orders and

other legally binding commitments that obligate the Company to

pay, assume, guaranty or secure an amount of $25,000 or more

individually or $100,000 or more in the aggregate or that

cannot be terminated without penalty by or on behalf of the

Company on less than ninety (90) days notice;

(iii) any and all contracts between the Company on

the one hand and any Affiliate of the Company on the other

hand (other than the Company's Charter Documents);

(iv) any and all broker, distributor, dealer,

representative or agency agreements;

(v) any and all insurance policies insuring the

Business, the Facility or any of the Company's respective

assets (collectively, the "INSURANCE POLICIES");'

(vi) any and all employment, non-competition or

consulting agreement that is currently in effect;

(vii) each contract containing covenants purporting

to materially limit the freedom of the Company to compete in

any line of business or in any geographic area;

(viii) any factoring agreements;

(ix) each partnership, joint venture or other similar

agreement or arrangement to which the Company is a party; and

(x) any and all agreements requiring a loan, advance

or guaranty of any Funded Indebtedness by the Company.

of all written Material Contracts, together with all amendments and

supplements thereto. A description of the principal terms and

conditions of each oral Material Contract, if any, is set forth on the

Contracts Schedule. The Material Contracts are in full force and effect

and are enforceable against the Company, as applicable, and To the Best

of Sellers' Knowledge all other parties thereto. Except as set forth on

the Contracts Schedule, (i) none of Sellers, nor the Company has

received any notice that it is in default under, or not in compliance

with any material provision of, any Material Contract, (ii) none of

Sellers nor the Company has delivered any notice to another party

-12-

<PAGE>

alleging any default under, or failure to comply with any material

provision of, any Material Contract, and (iii) with respect to the

Material Contracts, no event has occurred that, with notice, the

passage of time or both would constitute (A) a default by the Company,

or (B) a failure of the Company to comply with a material provision of

any of the Material Contracts, or (C) To the Best of Sellers'

Knowledge, otherwise give any party a right of termination or

modification thereof. Except as set forth on SCHEDULE 3.10(C), To the

Best of Seller's Knowledge, the consummation of the transactions

contemplated by this Agreement would not give any party to a Material

Contract the right to terminate or cancel the terms of such Material

Contract.

(d) Set forth on SCHEDULE 3.10(D) is a list of the twenty-five

(25) largest customers of the Company by gallons of fuel purchased in

the Company's most recent 12-month period. Other than the customers set

forth on SCHEDULE 3.10(D), no other customer accounted for more than

five percent (5%) of the gallons of fuel purchased by customers of the

Company in such 12-month period. None of Sellers nor the Company has

received any notice from any of the customers listed on SCHEDULE

3.10(D) that such customer intends to cease or reduce its buying of

goods or services from the Company.

(e) Except as disclosed on SCHEDULE 3.10(E), none of Sellers

nor the Company has received any notice from any material supplier to

or landlord of the Company that such material supplier or landlord

intends to terminate or materially alter its business relationship with

the Company.

(f) None of the Sellers nor the Company has failed to give any

notice or present any reasonably available claim under any of the

Insurance Policies in a timely fashion or in the manner or detail

required by the policy. None of the Insurance Policies is subject to

any retroactive rate or audit adjustments or coinsurance arrangements.

None of the Sellers nor the Company has received any notice of

cancellation, non-renewal or material premium increase with respect to

any Insurance Policy.

(g) The Company neither directly or indirectly, has any (i)

interest in the outstanding stock or ownership interests of any

corporation or in any partnership, joint venture or other entity, or

(ii) agreement, understanding, contract or commitment relating to an

interest in any such entity.

3.11 LITIGATION; PROCEEDINGS. Except as set forth in SCHEDULE 3.11,

none of the Sellers nor the Company has received notice of service of process

regarding or, To the Best of Sellers' Knowledge, otherwise been named as a party

to any pending action, suit, proceeding, judgment, order or governmental

investigation, and, To the Best of Sellers' Knowledge, no action, suit,

proceeding or governmental investigation has been threatened against the Company

before any federal, state, municipal or other governmental court or agency. The

Company is not subject to or in violation of any judgment, decree, injunction or

order.

3.12 BROKERAGE. No agent, broker, finder, or investment or commercial

banker engaged by or on behalf of Sellers or the Company is or will be entitled

to any brokerage commission, finders' fees or similar compensation as a result

of this Agreement or any of the transactions contemplated herein.

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<PAGE>

3.13 EMPLOYEES.

(a) SCHEDULE 3.13(A)(I) contains a complete and correct list

of all employees of the Company, their respective titles as of the date

hereof (the "BUSINESS EMPLOYEES"), the common law employer of the

employee, the 2005 compensation (excluding transaction bonuses) paid or

payable to each such employee, the date and amount of each such

employee's most recent salary increase, the date of employment of each

such employee and the accrued vacation time and sick leave or other

paid time off of each such employee. Except as set forth on SCHEDULE

3.13(A)(II), (i) the terms of employment or engagement of all officers

and Business Employees are such that their employment or engagement may

be terminated at will with notice given at any time and without

liability for payment of compensation or damages, (ii) there are no

severance payments which are or could become payable by the Company to

any such person under the terms of any oral or written agreement or

commitment or any Law, custom, trade or practice, (iii) there are no

other agreements, contracts or commitments, oral or written, between

the Company and any such person, (iv) as of the date hereof, except as

set forth on SCHEDULE 3.13(A)(III), To the Best of Sellers' Knowledge,

no management level Business Employee has provided notice that he or

she intends to terminate his or her employment or relationship with the

Company, (v) To the Best of Sellers' Knowledge, there are no agreements

between any Business Employee and any other Person which would

restrict, in any manner, such Person's ability to perform services, for

the Company, the Buyer, or any of their Affiliates or, in connection

with the operation of the Business, or the right of any of them to

compete with any Person.

(b) Except as disclosed in SCHEDULE 3.13(B), the Company is

not and has not ever been, bound by or subject to (and none of their

respective assets or properties are bound by or subject to) any

arrangement with any labor union or other collective bargaining

representative. No employee of the Company has ever been represented by

any labor union while employed by the Company or covered by any

collective bargaining agreement while employed by the Company and no

campaign to establish such representation is in progress. With respect

to the Company, there is no pending or, To the Best of Sellers'

Knowledge, threatened (i) strike, slowdown, picketing, work stoppage or

employee grievance process, (ii) material charge, grievance proceeding

or other claim against or affecting the Company relating to the alleged

violation of any law pertaining to labor relations or employment

matters, or (iii) application for certification of a collective

bargaining agent.

otherwise engage any independent contractors, consultants or agents

except as outlined on SCHEDULE 3.13(C); and the Company does not have

any liability arising out of the employment or engagement of any

independent contractors, consultants or agents.

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(d) SCHEDULE 3.13(D) lists all of the Business Employees who

are currently on leave relating to work-related injuries and/or

receiving disability benefits under any Benefit Plan.

(e) Except as set forth in SCHEDULE 3.13(E), no Company

employee plan provides, or reflects or represents any liability to

provide retiree health benefits to any person for any reason, except as

may be required by COBRA or other applicable statute, and the Company

has never represented, promised or contracted (whether in oral or

written form) to any employee (either individually or to employees as a

group) or any other person that such employees) or other person would

be provided with retiree health benefits, except to the extent required

by statute.

(f) To the Best of the Sellers' Knowledge, the Company has

not, prior to the Closing and in any material respect, violated any of

the health care continuation requirements of COBRA, the requirements of

FMLA, the requirements of the Health Insurance Portability and

Accountability Act of 1996, the requirements of the Women's Health and

Cancer Rights Act of 1998, the requirements of the Newborns' and

Mothers' Health Protection Act of 1996, or any amendment to each such

act, or any similar provisions of state law applicable to its

Employees. The Company will make available to Buyer five (5) days prior

to the Closing a list of former employees terminated within the last

eighteen (18) months who are entitled to COBRA coverage and the date on

which such COBRA coverage terminates.

3.14 EMPLOYEE BENEFIT PLANS.

(a) SCHEDULE 3.14(A) lists: (i) each plan, fund, program,

agreement or arrangement for the provision of executive compensation,

deferred or incentive compensation, profit sharing, stock bonus, bonus,

stock option, stock purchase, termination, salary continuation,

employee assistance, supplemental retirement, severance, vacation,

sickness, disability, death, fringe benefit, insurance, medical or

other benefits (whether provided through insurance, on a funded or

unfunded basis, or otherwise) to any current or former employee,

director, consultant or independent contractor, or any dependent,

survivor or beneficiary with respect to any of the foregoing, which is

maintained, administered or contributed to by the Company, whether or

not legally binding; (ii) each Employee Pension Benefit Plan which has

been maintained, administered or contributed to by the Company, any

ERISA Affiliate of the Company in the past six (6) years (the "PENSION

PLANS"); and (iii) each Employee Welfare Benefit Plan which is

currently maintained, administered or contributed to by the Company

(the "WELFARE PLANS") (collectively, the "BENEFIT PLANS").

(b) Each Pension Plan which is intended to qualify under

Section 401(a) of the Code so qualifies: (i) with respect to the form

of its plan documents and (ii) in operation. Each Benefit Plan (and

each related trust, insurance contract or fund) has been administered

in all material aspects in accordance with its governing instruments

and all applicable Law.

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<PAGE>

any Benefit Plan which could result in liability to the Company, or, To

the Best of the Sellers' Knowledge, any of their respective employees.

There has been no breach of fiduciary duty (including violations under

Part 4 of Title I of ERISA) with respect to any Benefit Plan which

could result in liability to the Company, or, To the Best of the

Sellers' Knowledge, any of its employees.

(d) Neither the Company nor any or its ERISA Affiliates have

ever maintained, contributed to, had any obligation to contribute to,

or had any other liability under or with respect to any Employee

Pension Benefit Plan covered by Title IV of ERISA or ERISA Section 302

or Section 412 of the Code. Neither the Company nor any of its ERISA

Affiliates have ever had any liability under or with respect to any

"multiemployer plan" as defined in ERISA Section 3(37).

(e) The Company has not have ever sponsored, maintained,

administered, contributed to, had any obligation to contribute to, or

had any other liability under or with respect to any Employee Welfare

Benefit Plan which provides health, life or other coverage for former

directors, officers or employees (or any spouse or former spouse or

other dependent thereof), other than benefits required by COBRA.

(f) Neither the Company nor any of its ERISA Affiliates have

ever maintained a "voluntary employees beneficiary association" within

the meaning of Section 501(c)(9) of the Code or any other "welfare

benefit fund" as defined in Section 419(e) of the Code.

(g) All reports and information relating to each Benefit Plan

required to be filed with any governmental agency or authority have

been timely filed, or have been filed without any current liability for

late filing, and are accurate in all material respects; all reports and

information relating to each such Benefit Plan required to be disclosed

or provided to participants or their beneficiaries have been timely

disclosed or provided, and there are no restrictions on the right of

the Company to terminate such plan or decrease (prospectively) the

level of benefits under any Benefit Plan after the Closing Date without

liability to any participant or beneficiary thereunder.

(h) There has been delivered to Buyer, with respect to each

Benefit Plan, the following: (i) a copy of the annual report (if

required under ERISA) with respect to each such Benefit Plan for the

last three (3) years (including all schedules and attachments); (ii) a

copy of the summary plan description, together with each summary of

material modification required under ERISA with respect to such Benefit

Plan; (iii) except as set forth in SCHEDULE 3.14(H), a true and

complete copy of each written Benefit Plan; (iv) all trust agreements,

insurance contracts, and similar instruments with respect to each

funded or insured Benefit Plan and with respect to Pension Plans, each

written plan document and all amendments thereto which have been

adopted since the inception of such plan; (v) copies of all

nondiscrimination and top-heavy testing reports for the last three (3)

plan years with respect to each Benefit Plan subject to

nondiscrimination and/or top-heavy testing; and (vi) any investment

management agreements, administrative services contracts or similar

agreements relating to the ongoing administration and investment of any

Benefit Plan.

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(i) Each Benefit Plan sponsored by the Company is terminable

or amendable to decrease prospectively the level of its benefits at the

discretion of such entity with no more than ninety (90) days advance

notice and without material cost to such entity. The Company may,

without material cost, withdraw its employees, directors, officers and

consultants from any Benefit Plan which is not sponsored by such

entity. No Benefit Plan has any provision which could increase or

accelerate benefits or any provision which could increase liability to

the Company as a result of the transactions contemplated hereby, alone

or together with any other event. To the Best of Sellers' Knowledge, no

officer, director, agent or employee of the Company or any of its ERISA

Affiliates has made any material oral or written representation which

is inconsistent with the terms of any Benefit Plan.

(j) The Company has not liability with respect to any Employee

Welfare Benefit Plan or Employee Pension Benefit Plan.

(k) All employees of the Company were permitted to participate

in the Company's 401(k) Plan after completing 12 months eligibility

service without regard to actual hours of service or job

classification.

3.15 COMPLIANCE WITH LAWS. The Company has complied, and the use and

operation of the Facility is in compliance, in all material respects, with all

applicable Laws which affect the Business, and has timely filed with the proper

authorities all material statements and reports required by the Laws to which

the Business is subject. The Company holds all material permits, licenses,

certificates, approvals, registrations, franchises, rights, qualifications and

other authorizations of federal, state and local governments, agencies and

regulatory authorities required for the conduct of the Business as operated to

the date hereof (collectively, the "PERMITS"). SCHEDULE 3.15 sets forth a

complete and accurate list of each Permit. The Company does not (1) hold any

Permit issued by any state or federal agency. To the Best of Sellers' Knowledge,

there is not pending or proposed any order, notice, rule, or directive, issued

by any governmental authority against the Company, nor, To the Best of Sellers'

Knowledge, is there now pending or threatened any legal or regulatory proceeding

by any governmental authority which is likely to materially adversely affect the

Business or assets of the Company or any Permit.

3.16 ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 3.16,

Sellers represent and warrant that:

(a) To the Best of Sellers' Knowledge, the Company materially

complies, and at all times during Sellers' ownership of the Membership

Interests has been in material compliance, with applicable

Environmental Laws;

(b) None of Sellers nor the Company has received any written

request for information, or has been notified that it is a potentially

responsible party, under CERCLA or any similar state or local law with

respect to any on-site or offsite location;

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all required material Environmental Permits relating to the Business,

enabling the Business to operate as of the Closing Date in the ordinary

course of business consistent with past practices;

(d) None of Sellers nor the Company has received any notice,

notification, demand, request for information, citation, summons,

complaint or order and, To the Best of Sellers' Knowledge, there is no

violation, claim, demand, litigation, proceeding or governmental

investigation (whether pending or threatened) arising from applicable

Environmental Laws by or against the Company. The Company is not

subject to any judgment, decree, order, or consent agreement relating

to compliance with any Environmental Laws, or the cleanup of Hazardous

Materials under any Environmental Laws;

(e) Sellers have delivered true, complete and correct copies

of any reports, or other documents possessed by or in the control of

Sellers or the Company pertaining to the environmental condition of the

Facility, Hazardous Materials on the Facility and regarding the

Company's compliance with applicable Environmental Laws. Except for

such reports or documents, at no time during Sellers' ownership of the

Membership Interests has there been any material investigation, study,

audit, test, review or other material analysis (including any Phase I

environmental assessments) conducted by, for, or provided to Sellers or

the Company in relation to the Business;

(f) Except as set forth in SCHEDULE 3.16, To the Best of

Sellers' Knowledge, the Facility does not contain any underground

storage tanks. To the best of the Sellers' knowledge, except as set

forth in SCHEDULE 3.16, there have been no material discharges,

emissions, spilling, leaking, pouring, emptying, or other releases of

Hazardous Materials which are or were reportable by Sellers or the

Company under any Environmental Laws.

(g) To the Best of Sellers' Knowledge, (i) the Report of Phase

I Environmental Site Assessment prepared by CGFA Services, Inc., dated

June 5, 2000, is accurate and, except as set forth on SCHEDULE 3.16,

includes an investigation and assessment of all parts of the real

property upon which the Facility is presently located.

3.17 AFFILIATE TRANSACTIONS. Except as set forth on SCHEDULE 3.17, no

Affiliate of the Company, nor any member, manager, officer, director or equity

holder of any thereof, is party to any agreement (other than the Company's

Charter Documents), or, To the Best of Sellers' Knowledge, any transaction or

understanding, with the Company. Except as set forth on SCHEDULE 3.17, the

consummation of the transactions contemplated by this Agreement will not (either

alone, or upon the occurrence of any act or event, or with the lapse of time, or

both) result in any benefit or payment (severance or other) arising or becoming

due from the Company to any entity or person other than Sellers in accordance

with the terms of this Agreement.

3.18 INTELLECTUAL PROPERTY RIGHTS. SCHEDULE 3.18 lists all of the

Intellectual Property owned or licensed by the Company and used in connection

with its Business (the "COMPANY INTELLECTUAL PROPERTY"). To the Best of Sellers'

Knowledge, use by Company of the Company Intellectual Property does not infringe

any rights of any third party and no activity of any third party infringes upon

the rights of the Company with respect to any of the Company Intellectual

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Property. To the Best of Sellers' Knowledge, no claims have been asserted by any

entity or person with respect to challenging the ownership, validity,

enforceability or use of the Company Intellectual Property, nor to the best of

the Sellers' knowledge, is there any valid grounds for any such bona fide

claims. To the extent the Company uses any Intellectual Property owned by a

third party, the Company has a license with such third party for the use of such

Intellectual Property and, to the best of the Sellers' knowledge, is not in

default under any such license.

3.19 BANK ACCOUNTS; POWERS OF ATTORNEY. SCHEDULE 3.19 lists each bank,

trust company, savings institution, brokerage firm, mutual fund or other

financial institution with which the Company has an account or safe deposit or

lock box and the names and identification of all persons authorized to draw on

it or to have access to it as of the Closing Date. Except as set forth on

SCHEDULE 3.19, neither the Company, nor any of its managers or officers, has any

power of attorney with respect to the Business outstanding.

3.20 FUEL VOLUME RECORDS. Five (5) days prior to Closing, the Company

will provide true and correct copies of the Company's fuel volume records and

gross receipt statements for the period from startup through five (5) days prior

to the Closing, reflecting the volume of fuel sold by the Company, and revenues

on which the Company paid any fee, during such period are attached as SCHEDULE

3.20. Such statements accurately reflect the volume of fuel sold and revenues

earned by the Company during such period and were prepared in accordance with

the Company's books and records.

3.21 INTENTIONALLY OMITTED.

3.22 INTENTIONALLY OMITTED.

3.23 ACCURACY OF REPRESENTATIONS. No representation, warranty,

statement or schedule furnished by the Company or any Seller to Buyer in

connection with the transactions contemplated hereby contains any untrue

statement of any material fact or omits to state any material fact necessary in

order to make the

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