SECURITIES PURCHASE AND SALE AGREEMENT
 

 

 
Between
 
CENTRAL ENERGY, LLC
 
As Buyer,
 
RIO VISTA ENERGY PARTNERS, L.P.
 
The Company
 
and
 
PENN OCTANE CORPORATION,
 
As Seller
 

 

 
DATED MAY 25, 2010
 
 
 
 
 
1

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

 
 
TABLE OF CONTENTS
 
1.
PURCHASE AND SALE OF THE INTERESTS
4
     
2.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5
     
3.
REPRESENTATIONS AND WARRANTIES OF SELLER
11
     
4.
REPRESENTATIONS AND WARRANTIES OF BUYER
16
     
5.
CONDITIONS PRECEDENT
17
     
6.
COVENANTS
20
     
7.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
21
     
8.
DOCUMENTS AT CLOSING AND THE CLOSING
21
     
9.
Post-Closing
23
     
10.
MISCELLANEOUS
23
     
Schedule 2(b) Organization and Good Standing
 
Schedule 2(e) Company Approvals
 
Schedule 2(f)-1 Company Financial Statements
 
Schedule 2(f)-2 Corrections to Company Financial Statements
 
Schedule 2(g) Material Adverse Changes Schedule
Schedule 2(h) Company Taxes
 
Schedule 2(l) Company Actions and Proceedings
 
Schedule 2(m) Company Material Agreements
 
Schedule 2(o) Company Real Estate
 
Schedule 2(q) Company Tangible Assets
 
Schedule 2(r) Company Liabilities
 
Schedule 2(t) Capitalization
 
Schedule 2(v) Warrants and Options
 
Schedule 2(w) Permits and Authorizations
 
Schedule 3(d) GP Approvals
 
Schedule 3(e)-1 GP Financial Statements
 
Schedule 3(e)-1 Corrections to GP Financial Statements
 
Schedule 3(f) Material Adverse Changes Schedule
 
Schedule 3(g) GP Taxes
 
Schedule 3(k) GP Actions and Proceedings
 
Schedule 3(l) GP Material Agreements
 

 
 
2

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

 
 
Schedule 3(n) GP Real Estate
 
Schedule 3(p) GP Tangible Assets
 
Schedule 3(q) GP Liabilities
 
Schedule 3(s) GP Capitalization
 
Schedule 5(a)(ix) Settlement of Claims
 

 
 
3

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

 
 
SECURITIES PURCHASE AND SALE AGREEMENT
 
This Securities Purchase and Sale Agreement (the “Agreement”) dated as of May
25, 2010, is by and among Central Energy, LLC, a Delaware limited liability
company (“Buyer”), Rio Vista Energy Partners, L.P., a Delaware limited
partnership (the “Company”), and Penn Octane Corporation, a Delaware corporation
(“Seller”).
 
RECITALS:
 
A.           Buyer desires to purchase and the Company desires to issue and sell
to Buyer on the Closing Date (as hereinafter defined) an amount of limited
partnership interests (“Common Units”) in the Company which, following their
issuance will constitute 80% of the “Fully Diluted Common Units” of the
Company.  “Fully Diluted Common Units” of the Company means the sum of (i) all
of the issued and outstanding Common Units of the Company on the Closing Date,
including the Common Units to be issued to Buyer on the Closing Date (the “Newly
Issued Common Units”) and (ii) all Common Units reserved for issuance by the
Company on the Closing Date pursuant to any options, warrants, debentures,
conversion rights or other plans or agreements under which the Company is
required as of the Closing Date to issue Common Units to any person or entity in
the future.
 
B.           Buyer desires to purchase and Seller desires to sell, or cause to
be sold, 100% of the limited liability company interests of Rio Vista GP, LLC
(the “GP Interests”), the general partner of the Company (the “GP”) (such GP
Interests and the Newly Issued Common Units being hereinafter occasionally
collectively referred to as the “Interests”).
 
C.           It is the intention of the parties hereto that Buyer shall acquire
the Interests on the terms and for the consideration set forth below.
 
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
 
1.           PURCHASE AND SALE OF THE INTERESTS
 
a)           Sale of Newly Issued Common Units.  Subject to the terms and
conditions of this Agreement, the parties agree that on the Closing Date (i) the
Company will issue and sell to Buyer 12,724,019 Newly Issued Common Units which,
when issued, will represent not less than Eighty Percent (80%) of the Fully
Diluted Common Units of the Company and (ii) Buyer will purchase the Newly
Issued Common Units for the Common Unit Purchase Price (as defined below).
 
b)           Sale of GP Interests.  Subject to the terms and conditions of this
Agreement, Seller hereby agrees that on the Closing Date it will sell, assign
and deliver, or cause to be sold, assigned and delivered, the GP Interests to
Buyer and Buyer agrees to Purchase the GP Interests for the GP Interest Purchase
Price (as defined below).  The GP Interests to be sold, assigned and delivered
will represent 100% of the issued and outstanding membership interests of the
GP.
 
c)           Purchase Price.  The purchase price for the Newly Issued Common
Units shall be Three Million Eight Hundred Fifty Two Thousand Two Hundred Ninety
One Dollars and No/100 ($3,852,291) (the “Common Unit Purchase Price”). The
Common Unit Purchase Price to be paid by Buyer to the Company and any additional
amounts contributed to the Company at Closing shall be held and utilized by the
Company, to the extent necessary, to satisfy Buyer’s conditions to closing set
out in Section 5(a)(ii) through (xii) hereof. The purchase price for the GP
Interests shall be One Hundred Forty Seven Thousand Seven Hundred and Nine
Dollars and No/100 ($147,709) (the “GP Interest Purchase Price”) which such
amount shall be contributed by Seller to the GP and then by the GP to the
Company simultaneously with the Closing (the Common Unit Purchase Price and the
GP Interest Purchase Price, collectively, the “Purchase Price”).
 
 
4

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

 
 
d)           Additional Consideration.  As additional consideration for the
purchase of the Interests, and conditioned on the closings of the transactions
contemplated by this Agreement on the Closing Date, Buyer agrees to contribute
sufficient additional capital to the Company from time to time following the
Closing Date, as required in Buyer’s sole judgment, to enable the Company to (i)
regain compliance with United States Securities and Exchange Commission (“SEC”)
reporting standards applicable to issuers of securities registered under Section
12 of the Securities Exchange Act of 1934, (ii) regain compliance with the
Company’s tax requirements, and (iii) provide adequate working capital for
anticipated operating expenses and ongoing compliance.
 
e)           Intercompany Note.  At the Closing, the Company agrees to satisfy
out of the Purchase Price that certain Promissory Note between the Seller and
the Company as well as all other intercompany advances between the Seller and
the Company, the Subsidiaries and/or Rio Vista (collectively, the “Intercompany
Note”) for a minimum amount of $1,400,000, subject to adjustment as follows (the
“Intercompany Note Settlement Amount”).  Schedule 5(a)(ix) will be updated as of
the Closing Date with respect to Settled Claims (as defined below), by mutual
agreement of the parties.  If as of the Closing Date, such updated Schedule
5(a)(ix) reflects a Settled Surplus (as such term is defined in Section
5(a)(ix)), then the Intercompany Note Settlement Amount shall be increased by
the amount of such Settled Surplus, up to a maximum of $200,000 (resulting in a
maximum Intercompany Note Settlement Amount of $1,600,000).
 
2.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company hereby represents and warrants as follows:
 
a)           Subsidiaries.  The Company owns 100% of the limited liability
company interests in Rio Vista Operating GP LLC (“RVOGP LLC”), which is the
general partner of Rio Vista Operating Partnership LP (“RVOP”) in which the
Company owns 99.9% of the limited partnership interests and RVOGP LLC owns the
remaining 0.1% limited partnership interest.  The Company also owns 100% of the
issued and outstanding stock of Regional Enterprises, Inc. (“Regional”).  The
Company owns 100% of the membership interests in each of Penn Octane
International LLC (“POI”) and Rio Vista Northport LLC, both of which are dormant
subsidiaries without any assets or liabilities (except that POI is a named party
in certain of the proceedings set forth on Schedule 2(l)(Actions and
Proceedings)).  RVOGP LLC, RVOP and Regional are occasionally hereinafter
collectively referred to as the “Subsidiaries.”
 
 
5

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

 
 
b)           Organization and Good Standing.  Except as set forth on Schedule
2(b), each of the Company and its Subsidiaries is duly organized, validly
existing and in good standing under the laws of the state of its
formation.  Except as set forth on Schedule 2(b), each of the Company and its
Subsidiaries has the power and authority to carry on its business as presently
conducted, and is duly qualified to do business in any jurisdiction where so
required except where the failure to so qualify would have no material adverse
effect on its business.
 
c)           Partnership Authority.  The Company has the power to operate as a
limited partnership.  The execution and delivery of this Agreement by the
Company, and the consummation by the Company of the transactions contemplated
hereby, are not in violation of any restrictions under its governing
documents.  Subject to the satisfaction of the condition precedent set out in
Section 5(a)(vi) hereof, the execution of this Agreement and the consummation by
the Company of the transactions contemplated hereby on the Closing Date will not
constitute a breach of any agreement, indenture, mortgage, license or other
instrument or document to which the Company or any of its Subsidiaries is a
party and will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to the Company, its Subsidiaries or any of their
respective properties.  The execution and performance of this Agreement by the
Company will not violate or conflict with any provision of the certificate of
formation or the organizational documents of the Company or any of its
Subsidiaries.
 
d)           Newly Issued Common Units.  The Company represents and warrants
that the Newly Issued Common Units to be delivered to Buyer on the Closing Date
shall be issued and delivered to Buyer free and clear of all rights, claims,
liens and encumbrances, except that Buyer acknowledges that the Newly Issued
Common Units will be restricted securities under applicable United States
securities laws.  The Newly Issued Common Units to be issued to Buyer on the
Closing Date will have been duly authorized and validly issued and will be fully
paid and will constitute 80% of the Fully Diluted Common Units of the Company.
 
e)           Approvals.  No approval, authorization, consent, order or other
action of, or filing with, any person, firm or corporation or any court,
administrative agency or other governmental authority is required in connection
with the execution and delivery of this Agreement by the Company or the
consummation of the transactions described herein, other than as set forth on
Schedule 2(e).
 
f)           Financial Statements, Books and Records.  Attached as Schedule
2(f)-1 are the unaudited internal financial statements of the Company and its
Subsidiaries for the year ended December 31, 2009 and the audited financial
statements of the Company and its Subsidiaries for the year ended December 31,
2008 (the “Company Financial Statements”).  Except as set forth on Schedule
2(f)-2, the Company Financial Statements, books of account and other financial
records of the Company and its Subsidiaries are complete and correct in all
material respects and are maintained in accordance with good business and
accounting practices.
 
g)           No Material Adverse Changes.  Except as set forth on Schedule 2(g),
since December 31, 2009 there has not been:
 
i.           any material adverse change in the financial position of the
Company or its Subsidiaries except changes arising in the ordinary course of
business, which changes are not reasonably likely to adversely affect the
financial position of the Company or any of its Subsidiaries in any material
respect;
 
 
6

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

 
 
ii.           any damage, destruction or loss materially affecting the assets,
prospective business, operations or condition (financial or otherwise) of the
Company or any of its Subsidiaries whether or not covered by insurance;
 
iii.           any declaration, setting aside or payment of any dividend or
distribution with respect to the Common Units or any other equity interests in
the Company;
 
iv.           any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by the Company or any of its Subsidiaries of
any properties or assets;
 
v.           adoption of any pension, profit sharing, retirement, stock bonus,
stock option or similar plan or arrangement; or
 
vi.           payments or asset purchases not in the ordinary course of
business.
 
h)           Taxes.  Except as set forth on Schedule 2(h), the Company and its
Subsidiaries have filed all material tax, governmental and/or related forms and
reports (or extensions thereof) due or required to be filed and has paid or made
adequate provisions for all taxes or assessments which have become due as of the
Closing Date as shown to be due on such reports and returns, and there are no
deficiency notices outstanding.  No extensions of time for the assessment of
deficiencies for any year are in effect.  No deficiency notice is proposed or,
to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries.  In the past 5 years, the tax returns of the Company and its
Subsidiaries have not been audited.
 
i)           Compliance with Laws.  Except as set forth on Schedule 2(i), the
Company and its Subsidiaries are in compliance with all federal, state, county
and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to them and their respective
businesses which, if not complied with, would adversely affect the business of
the Company or any of its Subsidiaries in any material respect.
 
j)           No Breach.  Except as set forth on Schedule 2(j), the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not:
 
i.           violate any provision of the certificate of formation or the
governing documents of the Company or any of its Subsidiaries;
 
ii.           violate, conflict with or result in the breach of any of the terms
of, result in a material modification of, otherwise give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time, or
both constitute) a default under any contract or other agreement to which the
Company or any of its Subsidiaries is a party or by or to which the Company or
any of its Subsidiaries’ assets or properties may be bound or subject;
 
 
7

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

 
 
iii.           violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding upon,
the Company or any of its Subsidiaries or upon the properties or business of the
Company or any of its Subsidiaries; or
 
iv.           violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein which could have a material,
adverse effect on the business or operations of the Company or any of its
Subsidiaries.
 
k)           Offering Valid.  The offer, sale and issuance of the Newly Issued
Common Units and the offer and sale of the GP Interests will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
“Securities Act”), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration or qualification
requirements of all applicable state securities laws.  Neither the Company, the
GP nor any agent on their behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the Newly
Issued Common Units and the GP Interests to any person or persons so as to bring
the sale of such Newly Issued Common Units and GP Interests by the Company
within the registration provisions of the Securities Act or any state securities
laws.
 
l)           Actions and Proceedings.  Except as set forth on Schedule 2(l) (the
“Scheduled Litigation”), neither the Company nor any of its Subsidiaries is a
party to, or affected by, any material pending litigation.  Neither the Company
nor any of its Subsidiaries is a party to any governmental investigation or
proceeding not reflected in the Company Financial Statements and, to the
Company’s knowledge, no material litigation, claims, assessments or
non-governmental proceedings are threatened against the Company or any of its
Subsidiaries except as set forth on Schedule 2(l) attached hereto and made a
part hereof.
 
m)           Agreements.  Schedule 2(m) sets forth all material contracts or
arrangements to which the Company or any of its Subsidiaries is a party or by or
to which the Company or any of its Subsidiaries or their assets, properties or
businesses are bound or subject, whether written or oral.
 
n)           Brokers or Finders.  No broker’s or finder’s fee will be payable by
the Company or any of the Subsidiaries in connection with the transactions
contemplated by this Agreement, nor will any such fee be incurred as a result of
any actions by the Company or any of its Subsidiaries hereunder.
 
o)           Real Estate.  Schedule 2(o) sets forth all real property owned by
the Company and its Subsidiaries and all leasehold agreements with a term in
excess of 90 days for real property, equipment or services to which the Company
or any of its Subsidiaries is a party.  All uses of any real property and leases
of real property by the Company or its Subsidiaries have conformed in all
material respects to all applicable building and zoning ordinances, laws and
regulations.
 
p)           OSHA and Environmental Compliance.  The Company and its
Subsidiaries have duly complied in all material respects with, and their
respective offices, real property, business, assets, leaseholds and equipment
have been in compliance in all material respects with, the provisions of the
Federal Occupational Safety and Health Act, the Environmental Protection Act,
and all other environmental laws.  No citations, notices or orders of
non-compliance have been issued to the Company or its Subsidiaries or relating
to their respective businesses, assets, property or equipment under such laws,
rules or regulations, except for the outstanding OSHA citations relating to the
July 25, 2005 Nitric incident and the November 27, 2005 death of David Widner
(driver).  There are no releases, spills, discharges, leaks or disposal
(collectively, referred to as “Company Releases”) of hazardous substances at,
upon, under or within the real property owned or leased by the Company or any of
its Subsidiaries that require remediation or Company action under applicable
law.  No real property owned or leased by the Company or any of its Subsidiaries
has been used as a treatment, storage or disposal facility of hazardous
waste.  No hazardous substances are present on the real property or any premises
leased by the Company or any of its Subsidiaries excepting such quantities as
are handled in accordance with all applicable manufacturer’s instructions and
governmental regulations and in the proper storage containers and as are
necessary for the operation of the commercial business of the Company and its
Subsidiaries.
 
 
8

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

 
 
q)           Tangible Assets.  All machinery, equipment, furniture, leasehold
improvements, fixtures, projects, or other tangible assets owned or leased by
the Company or any of its Subsidiaries which are material to their respective
businesses are described in Schedule 2(q) hereto (the “Company Tangible
Assets”).  Other than as set forth in Schedule 2(q), the Company and its
Subsidiaries hold all rights, title and interest in all the Company Tangible
Assets owned by them as reflected by the Company Financial Statements and
Schedule 2(q) and acquired by them after the date of the Company Financial
Statements free and clear of all liens, pledges, mortgages, security interests,
conditional sales contracts or any other encumbrances except those which are set
out in Schedule 2(q).  All of the Company Tangible Assets are in good operating
condition and repair, subject to reasonable wear and tear due to the elements
and lapse of time and are usable in the ordinary course of business of the
Company and its Subsidiaries and conform to all applicable laws, ordinances and
government orders, rules and regulations relating to their construction and
operation, except as set forth on Schedule 2(q) hereto.  Neither the Company nor
any of its Subsidiaries owns any intellectual properties, including trademarks
and the like.
 
r)           Liabilities.  Except as set forth on Schedule 2(r) neither the
Company nor any of its Subsidiaries has any material direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation, any liability on account of taxes, any governmental charge
or lawsuit (all of the foregoing collectively defined to as “Company
Liabilities”), which are not fully, fairly and adequately reflected on the
Company Financial Statements (annual and interim), except for a specific list of
Company Liabilities set forth on Schedule 2(r) attached hereto and made a part
hereof.  As of the Closing Date, neither the Company nor any of its Subsidiaries
will have any Company Liabilities, other than Company Liabilities fully and
adequately reflected on the Company Financial Statements or herein or other than
Company Liabilities incurred in the ordinary course of business (which, in the
case of the Company, shall not exceed $25,000 in the aggregate) on the date of
Closing.  To the Company’s knowledge, there is no circumstance, condition, event
or arrangement which may hereafter give rise to any Company Liabilities not in
the ordinary course of business other than as set forth on Schedule 2(r).
 
 
9

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

 
 
s)           Operations of the Company and its Subsidiaries.  From the date of
this Agreement through the Closing Date or earlier termination of this
Agreement, neither the Company nor any of its Subsidiaries have or, without the
prior written consent of Buyer, not to be unreasonably withheld, will:
 
i.           incur any indebtedness or borrowed money (provided, however, the
Company may restructure or repay its outstanding debt with RZB);
 
ii.           declare or pay any dividend or declare or made any distribution of
any kind to any holder of Common Units, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any interests in its
capital structure;
 
iii.           make any loan or advance to any shareholder, officer, director,
employee, consultant, agent or other representative or make any other loan or
advance;
 
iv.           dispose of any assets of the Company other than in the ordinary
course of business;
 
v.           increase the level of compensation of any executive employee of the
Company or any of its Subsidiaries;
 
vi.           increase, terminate, amend or otherwise modify any plan for the
benefit of employees of the Company or any of its Subsidiaries;
 
vii.           issue any equity securities or rights to acquire such equity
securities; or
 
viii.           enter into or modify any contract, agreement or transaction
material to the business of the Company or any of its Subsidiaries.
 
t)           Capitalization.  Schedule 2(t) hereto sets out (i) the number of
Common Units of the Company currently issued and outstanding, (ii) each
agreement granting any person the option to acquire Common Units in the future
and the maximum number of Common Units that can be acquired under such option,
and (iii) each debenture, warrant, convertible security or other obligation or
agreement under which any person has the right to acquire, by way of purchase,
conversion or otherwise, Common Units of the Company in the future and the
maximum number of Common Units that may be acquired under each such debenture,
warrant or other obligation or agreement to which the Company is a
party.  Except as set forth on Schedule 2(t), the Company is current with
respect to all dividend obligations with respect to its Common Units.  Except as
set forth on Schedule 2(t), the Company has no issued and outstanding equity
interests other than the Common Units.  The Company has no subsidiaries which
currently own assets or have any liabilities other than the Subsidiaries and
POI.
 
u)           Full Disclosure.  The Company has provided Buyer with all
information requested by Buyer in connection with its decision to purchase the
GP Interests and the Newly Issued Common Units.  To the Company’s knowledge,
there are no facts which (individually or in the aggregate) materially adversely
affect the business, assets, liabilities, financial condition, prospects or
operations of the Company that have not been set forth in this Agreement or in
any document or schedule to be delivered by it pursuant hereto.  No
representation or warranty by the Company in this Agreement or in any document
or schedule to be delivered by it pursuant hereto, and no written statement,
certificate or instrument furnished or to be furnished by the Company pursuant
hereto or in connection with the negotiation, execution or performance of this
Agreement contains or will contain any untrue statement of a material fact or
omits or, to the Company’s knowledge, will omit to state any fact necessary to
make any statement herein or therein not materially misleading or necessary to a
complete and correct presentation of all material aspects of the business of the
Company and its Subsidiaries, and/or the status of the GP Interests and the
Newly Issued Common Units.
 
 
10

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

 
 
v)           Option, Warrants, Conversion Rights.  Except as set forth in
Schedule 2(v), there are no outstanding subscriptions, options, convertible
securities, warrants or calls to purchase or otherwise acquire any securities of
the Company.
 
w)           Permits, Authorizations.  Excepts as set forth in Schedule 2(w),
the Company and its Subsidiaries possess all necessary licenses, permits,
authorizations and other qualifications as are necessary to continue to conduct
their respective businesses as presently conducted.
 
3.           REPRESENTATIONS AND WARRANTIES OF SELLER
 
Seller hereby represents and warrants as follows:
 
a)           Organization and Good Standing.  The GP is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware except as set forth in Schedule 3(a).  The GP has the
company power and authority to carry on its business as presently conducted,
except as set forth in Schedule 3(a), and is duly qualified to do business in
any jurisdiction where so required except where the failure to so qualify would
not adversely affect its business in any material respect.
 
b)           Authority.  The GP has the power to operate as a limited liability
company.  The execution and delivery of this Agreement by Seller, and the
consummation of the transactions contemplated hereby, are not in violation of
any limited liability company restrictions governing member
transactions.  Subject to the satisfaction of the condition precedent set out in
Section 5(a)(vi) hereof, the execution of this Agreement and the consummation of
the transactions contemplated hereby on the Closing Date will not constitute a
breach of any agreement, indenture, mortgage, license or other instrument or
document to which the GP or Seller is a party and will not violate any judgment,
decree, order, writ, rule, statute, or regulation applicable to Seller or the GP
or its properties.  The execution and performance of this Agreement will not
violate or conflict with any provision of the Certificate of Formation or the
Limited Liability Company Agreement of the GP.
 
c)           Ownership of Interests.  Seller is the owner of record and
beneficially of Seventy Five Percent (75%) of the membership interests of the GP
and has the contract right to cause the other Twenty Five (25%) of the GP
Interest to be transferred to Buyer at Closing.  Seller represents and warrants
that the GP Interests shall be delivered and assigned to Buyer on the Closing
Date free and clear of all rights, claims, liens and encumbrances.  There are no
outstanding subscriptions, options, convertible securities, warrants or calls to
purchase or otherwise acquire any securities of GP.
 
 
11

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

 
 
d)           Approvals.  To Seller’s knowledge, no approval, authorization,
consent, order or other action of, or filing with, any person, firm or
corporation or any court, administrative agency or other governmental authority
is required in connection with the execution and delivery of this Agreement by
Seller or the consummation of the transactions described herein, other than as
set forth on Schedule 3(d).
 
e)           Financial Statements, Books and Records.  Attached as Schedule
3(e)-1 are the internal unaudited financial statements of GP for the years ended
December 31, 2009 and December 31, 2008 and (the “GP Financial
Statements”).  Except as set forth on Schedule 3(e)-2, to Seller’s knowledge,
the GP Financial Statements, books of account and other financial records of GP
are complete and correct in all material respects and are maintained in
accordance with good business and accounting practices.
 
f)           No Material Adverse Changes.  Except as set forth on Schedule 3(f),
since December 31, 2009, to Seller’s knowledge there has not been:
 
i.           any material adverse change in the financial position of GP except
changes arising in the ordinary course of business, which changes are not
reasonably likely to materially and adversely affect the financial position of
GP in any material respect;
 
ii.           any damage, destruction or loss materially affecting the assets,
prospective business, operations or condition (financial or otherwise) of GP
whether or not covered by insurance;
 
iii.           any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of GP limited
liability company interests;
 
iv.           any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by GP of any properties or assets;
 
v.           adoption of any pension, profit sharing, retirement, stock bonus,
stock option or similar plan or arrangement; or
 
vi.           payments or asset purchases not in the ordinary course of
business.
 
g)           Taxes.  To Seller’s knowledge, except as set forth on Schedule
3(g), GP has filed all material tax, governmental and/or related forms and
reports (or extensions thereof) due or required to be filed and has paid or made
adequate provisions for all taxes or assessments which have become due as of the
Closing Date as shown to be due on such reports and returns, and there are no
deficiency notices outstanding.  To Seller’s knowledge, no extensions of time
for the assessment of deficiencies for any year is in effect.  To Seller’s
knowledge, no deficiency notice is proposed or, to the knowledge of Seller,
threatened against GP.  During the past five years, the tax returns of GP have
not been audited.
 
h)           Compliance with Laws.  Except as set forth on Schedule 3(h), to
Seller’s knowledge, GP has complied with all federal, state, county and local
laws, ordinances, regulations, inspections, orders, judgments, injunctions,
awards or decrees applicable to it or its business which, if not complied with,
would adversely affect the business of GP in any material respect.
 
 
12

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

 
 
i)           No Breach.  The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not:
 
i.           violate any provision of the Certificate of Formation or the
Limited Liability Company Agreement of GP;
 
ii.           violate, conflict with or result in the breach of any of the terms
of, result in a material modification of, otherwise give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time, or
both constitute) a default under any contract or other agreement to which GP is
a party or by or to which it or any of its assets or properties may be bound or
subject;
 
iii.           violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding upon,
GP or upon the properties or business of GP; or
 
iv.           To Seller’s knowledge, violate any statute, law or regulation of
any jurisdiction applicable to the transactions contemplated herein which could
have a material, adverse effect on the business or operations of GP.
 
j)           Offering Valid.  The offer, sale and issuance of the Newly Issued
Common Units and the offer and sale of the GP Interests will be exempt from the
registration requirements of the Securities Act, and will have been registered
or qualified (or are exempt from registration and qualification) under the
registration or qualification requirements of all applicable state securities
laws.  Neither the Company, the GP nor any agent on their behalf has solicited
or will solicit any offers to sell or has offered to sell or will offer to sell
all or any part of the Newly Issued Common Units and the GP Interests to any
person or persons so as to bring the sale of such Newly Issued Common Units and
GP Interests by the Company within the registration provisions of the Securities
Act or any state securities laws.
 
k)           Actions and Proceedings.  To Seller’s knowledge, except as set
forth in Schedule 3(k), GP is not a party to, or affected by, any material
pending litigation.  To Seller’s knowledge, GP is not a party to any
governmental investigation or proceeding not reflected in the GP Financial
Statements and, to its knowledge, no material litigation, claims, assessments or
non-governmental proceedings are threatened against GP except as set forth on
Schedule 3(k) attached hereto and made a part hereof.
 
l)           Agreements.  Schedule 3(l) sets forth all material contracts or
arrangements to which GP is a party or by or to which it or its assets,
properties or business are bound or subject, whether written or oral.
 
m)           Brokers or Finders.  No broker’s or finder’s fee will be payable by
GP or Seller in connection with the transactions contemplated by this Agreement,
nor will any such fee be incurred as a result of any actions by GP or Seller
hereunder.
 
 
13

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

 
 
n)           Real Estate.  Schedule 3(n) sets forth all real property owned by
the GP and all leasehold agreements with a term in excess of 90 days for real
property, equipment or services to which the GP is a party.  To Seller’s
knowledge, all uses of any real property or leases of real property by GP have
conformed in all material respects to all applicable building and zoning
ordinances, laws and regulations.
 
o)           OSHA and Environmental Compliance.  To Seller’s knowledge, the GP
has duly complied with, and its offices, real property, business, assets,
leaseholds and equipment have been in compliance in all material respects with,
the provisions of the Federal Occupational Safety and Health Act, the
Environmental Protection Act, and all other environmental laws.  To Seller’s
knowledge, no citations, notices or orders of non-compliance have been issued to
GP or relating to its business, assets, property or equipment under such laws,
rules or regulations.  There are no releases, spills, discharges, leaks or
disposal (collectively, referred to as “GP Releases”) of hazardous substances
at, upon, under or within the real property owned or leased by GP.  To Seller’s
knowledge, no real property owned or leased by the GP has been used as a
treatment, storage or disposal facility of hazardous waste.  To Seller’s
knowledge, no hazardous substances are present on the real property or any
premises leased by GP excepting such quantities as are handled in accordance
with all applicable manufacturer’s instructions and governmental regulations and
in the proper storage containers and as are necessary for the operation of the
commercial business of GP.
 
p)           Tangible Assets.  To Seller’s knowledge, all machinery, equipment,
furniture, leasehold improvements, fixtures, projects, owned or leased by GP,
any related capitalized items or other tangible property which are material to
the business of GP are described in Schedule 3(p) hereto (the “GP Tangible
Assets”).  To Seller’s knowledge, other than as set forth in Schedule 3(p), GP
holds all rights, title and interest in all the Tangible Assets owned by it on
the GP Financial Statements and Schedule 3(p) and acquired by it after the date
of the GP Financial Statements free and clear of all liens, pledges, mortgages,
security interests, conditional sales contracts or any other encumbrances except
those which are set out in Schedule 3(p) hereto.  To Seller’s knowledge, all of
the GP Tangible Assets are in good operating condition and repair, subject to
reasonable wear and tear due to the elements and lapse of time and are usable in
the ordinary course of business of GP and conform to all applicable laws,
ordinances and government orders, rules and regulations relating to their
construction and operation, except as set forth on Schedule 3(p) hereto.  Except
as set forth on Schedule 3(p), GP owns no intellectual properties, including
trademarks and the like.
 
q)           Liabilities.  To Seller’s knowledge, GP does not have any material
direct or indirect indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, known or unknown, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, accrued or absolute, contingent or
otherwise, including, without limitation, any liability on account of taxes, any
governmental charge or lawsuit (all of the foregoing collectively defined to as
“GP Liabilities”), which are not fully, fairly and adequately reflected on the
GP Financial Statements (annual and interim), except for a specific list of GP
Liabilities set forth on Schedule 3(q) attached hereto and made a part
hereof.  To Seller’s knowledge, as of the Closing Date, GP will not have any
liabilities, other than GP Liabilities fully and adequately reflected on the GP
Financial Statements or herein other than GP Liabilities incurred in the
ordinary course of business which will not exceed $25,000 on the date of
Closing.  To Seller’s knowledge, there is no circumstance, condition, event or
arrangement which may hereafter give rise to any GP Liabilities not in the
ordinary course of business.
 
 
14

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

 
 
r)           Operations of GP.  From the date of this Agreement through the
Closing Date or earlier termination of this Agreement, GP has not, and, without
the prior written consent of Buyer, not to be unreasonably withheld, will not
have:
 
i.           incurred any indebtedness or borrowed money;
 
ii.           declared or paid any dividend or declared or made any distribution
of any kind to any member, or made any direct or indirect redemption,
retirement, purchase or other acquisition of any interests in its capital
structure;
 
iii.           made any loan or advance to any member, officer, director,
employee, consultant, agent or other representative or made any other loan or
advance;
 
iv.           disposed of any assets of GP other than in the ordinary course of
business;
 
v.           increased the level of compensation of any executive employee of
GP;
 
vi.           increased, terminated, amended or otherwise modified any plan for
the benefit of employees of GP;
 
vii.           issued any equity securities or rights to acquire such equity
securities;
 
viii.           entered into or modified any contract, agreement or transaction
material to the business of the GP.
 
s)           Capitalization.  Schedule 3(s) sets out (i) the number of limited
liability company interests in GP currently issued and outstanding and the
record owners thereof, (ii) each agreement granting any person the option to
acquire limited liability interests in the GP in the future and the maximum
number of limited liability company interests that can be acquired under such
agreement and (iii) each other obligation or agreement of the GP under which any
person has the right to acquire, by purchase, conversion or otherwise, limited
liability company interests in the GP in the future and the maximum number of
limited liability company interests that may be acquired under such obligation
or agreement.  Except as set forth in Schedule 3(s), the GP is current with
respect to all distribution obligations.
 
t)           Full Disclosure.  Seller has provided Purchaser with all
information requested by Buyer in connection with its decision to purchase the
GP Interests and Common Units.  To the Seller’s knowledge, there are no facts
which (individually or in the aggregate) materially adversely affect the
business, assets, liabilities, financial condition, prospects or operations of
the Company that have not been set forth in this Agreement or in any document or
schedule to be delivered by it pursuant hereto.  To Seller’s knowledge, no
representation or warranty by Seller in this Agreement or in any document or
schedule to be delivered by them pursuant hereto, and no written statement,
certificate or instrument furnished or to be furnished by Seller pursuant hereto
or in connection with the negotiation, execution or performance of this
Agreement contains or, to the Seller’s knowledge, will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to a complete and correct presentation of all material aspects of the business
of the GP, and/or the status of the GP Interests.
 
 
15

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

 
 
4.           REPRESENTATIONS AND WARRANTIES OF BUYER
 
a)           Organization and Good Standing.  Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware.  It has the power to own its own property and to carry on
its business as now being conducted and is duly qualified to do business in any
jurisdiction where so required except where the failure to so qualify would have
no material adverse effect on its business.
 
b)           Partnership Authority.  Buyer has the power to enter into this
Agreement and to perform its obligations hereunder.  The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
has been, or will be prior to the Closing Date, duly authorized by Buyer.  The
execution and performance of this Agreement will not constitute a material
breach of any agreement, indenture, mortgage, license or other instrument or
document to which Buyer is a party and will not violate any judgment, decree,
order, writ, rule, statute, or regulation applicable to Buyer or its
properties.  The execution and performance of this Agreement will not violate or
conflict with any provision of the Certificate of Formation or Limited Liability
Company Agreement of Buyer.
 
c)           Brokers or Finders.  No broker’s or finder’s fee will be payable by
Buyer in connection with the transactions contemplated by this Agreement for
which the Company or Seller will have any liability, nor will any such fee be
incurred by the Company, the GP or Seller as a result of any actions of Buyer
hereunder.
 
d)           Investment Intent.  Buyer hereby represents that the Interests are
being acquired for Buyer’s own account with no intention of distributing such
securities or any interest therein or the assets or operations of the Company or
the GP directly or indirectly to others, and Buyer has no contract, undertaking,
agreement or arrangement with any person to sell, transfer or otherwise
distribute to any person or to have any person sell, transfer or otherwise
distribute, directly or indirectly, the Interests or any interest therein or the
assets or operations of the Company or the GP; provided, however, that the Buyer
may distribute the Interests to members of the Buyer or the partners in a
partnership where the Buyer is a partner.  Buyer is an “accredited investor” as
defined in Regulation D under the Securities Act.
 
e)           Full Disclosure.  No representation or warranty by Buyer in this
Agreement or in any document or schedule to be delivered pursuant hereto, and no
written statement, certificate or instrument furnished or to be furnished by
Buyer pursuant hereto or in connection with the negotiation, execution or
performance of this Agreement contains or will contain any untrue statement of a
material fact or, to Buyer’s knowledge, omits or will omit to state any fact
necessary to make any statement herein or therein not materially misleading or
necessary to complete and correct presentation of all material aspects of the
business of Buyer.
 
 
16

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

 
 
5.           CONDITIONS PRECEDENT
 
a)           Conditions Precedent to the Obligation of Buyer.  All obligations
of Buyer under this Agreement are subject to the fulfillment, prior to or as of
the Closing Date, as indicated below, of each of the following conditions:
 
i.           Satisfactory completion of customary and normal due diligence by
Buyer relating to the Company, the GP, the Subsidiaries and their respective
assets;
 
ii.           Settlement of the Camacho Lawsuit, identified on Schedule 2(l), by
the Company and its Subsidiaries in a manner satisfactory to Buyer;
 
iii.           Settlement of all outstanding claims Gary Moores has or may have
against the Company in respect of a promissory note having an original stated
principal amount of $500,000, as subsequently amended, including a full release
by Moores of the Company from any indemnification obligations relating to Energy
Spectrum, for a total amount not to exceed $200,000;
 
iv.           Settlement of and/or the provision of adequate reserves or other
adequate assurance by the Company and its Subsidiaries with respect to the
Scheduled Litigation in a manner satisfactory to Buyer;
 
v.           Sufficient progress by the Company, to the satisfaction of Buyer,
with respect to a final determination from the United States Internal Revenue
Service (the “IRS”) regarding the amount, and ultimate settlement, of (i) the
Company’s and Regional’s unpaid taxes, and (ii) any penalties for non-filing of
taxes owed by the Company, its Subsidiaries, or Regional (collectively, the “IRS
Tax Liability”);
 
vi.           The receipt of an assignment from JBR Capital Resources, Inc.
(“JBR”) of its GP Interests to Buyer, to be held in escrow prior to Closing,
subject only to the payment of $575,000 (the “JBR Settlement Amount”) due under
that certain Confidential Settlement Agreement and General Release of Claims
dated March 30, 2010 between Jerome B. Richter, JBR, Seller and the Company (the
“Settlement Agreement”); said amount to be paid by the Company at Closing, out
of the Purchase Price;
 
vii.           An amendment to that certain Loan Agreement, dated July 26, 2007,
as amended, between the Company, as borrower, and RZB Finance, LLC (“RZB”), as
lender (the “Loan Agreement”), that is satisfactory to Buyer, related to
restructuring of the current and expected increase to monthly amortization
amounts thereunder to a level consistent with the Company’s financial ability to
service and amortize the loan, along with an amendment to, or waiver by RZB of,
any change of control provision contained in the Loan Agreement which would
prohibit the consummation of the transactions contemplated by this Agreement;
 
viii.           Settlement and release of (a) the Intercompany Note and (b) any
other outstanding obligations to executive officers and directors of the Company
(the “Insider Obligations”), evidenced by a form of release reasonably
satisfactory to Buyer, for an amount equal to $1,400,000, subject, however, to
possible upward adjustment with respect to the Intercompany Note as provided in
Section 1(e);
 
 
17

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

 
 
ix.           Settlement, release or satisfaction by the Company in a manner
reasonably satisfactory to Buyer of a sufficient amount of (a) claims relating
to the Scheduled Litigation and any and all other litigation, suits and claims
made against the Company and/or its Subsidiaries (“Litigation Claims”) and (b)
creditor claims identified on Schedule 5(a)(ix) (the “Creditor Claims” and
together with the Litigation Claims, the “Claims”) by the Company at Closing
with proceeds from the Purchase Price (inclusive of amounts used to settle the
Insider Obligations) such that the aggregate dollar amount of such settled
Claims (“Settled Claims”), plus the aggregate dollar amount of 100% of all
unsettled Claims (“Unsettled Claims”) in amounts not less than those set forth
on Schedule 5(a)(ix), plus $250,000 reserved for the payment of the IRS Tax
Liability, shall be equal to or less than $4,000,000.  The difference, if any,
between $4,000,000 and the total amount of the Settled Claims, the Unsettled
Claims and the amount reserved for the IRS Tax Liability shall be the “Settled
Surplus”;
 
x.           The establishment of a restricted banking account in the name of
the Company (the “Reserve Account”) into which all portions of the Purchase
Price not utilized at Closing to pay Settled Claims shall be deposited for the
purpose of establishing a reserve sufficient to enable the Company to pay, to
the extent required, the sum of the following amounts:  (a) 100% of the amount
of all Unsettled Claims, and (b) the full estimated amount of IRS Tax Liability
and any other unpaid taxes or penalties of the Company, the GP or the
Subsidiaries existing as of the Closing Date (collectively, “Unpaid
Taxes”).  Following the Closing Date, funds shall be disbursed from the Reserve
Account to satisfy the requirements specified herein under the joint direction
and control of Buyer and the Company;
 
xi.           A contribution by the Seller of the GP Unit Purchase Price to the
Company, simultaneously with Closing, on behalf of the GP;
 
xii.           The resignation of the current Board of Managers of the Company;
 
xiii.           The representations and warranties by the Company and Seller,
contained in this Agreement and in any certificate or document delivered
pursuant to the provisions hereof shall be true in all material respects at and
as of the Closing Date as though such representations and warranties were made
at and as of such time;
 
xiv.           The Company and Seller shall have performed and complied with, in
all material respects, all covenants, agreements, and conditions set forth in,
and shall have executed and delivered all documents required by this Agreement
to be performed or complied or executed and delivered by it prior to or at the
Closing;
 
xv.           That certain Omnibus Agreement dated September 16, 2004 by and
among Seller, the GP, the Company and RVOP, as amended (the “Omnibus
Agreement”), shall have been terminated in a manner reasonably satisfactory to
Buyer;
 
 
18

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

 
 
xvi.           On the Closing Date, the Company shall have delivered to Buyer
the Newly Issued Common Units and Seller shall have delivered to Buyer
certificates representing the GP Interests along with duly executed powers
transferring such certificates to Buyer, and the Company and Seller shall
deliver the other closing items specified in Section 8(b)(i) and (ii) hereto to
Buyer;
 
xvii.           Receipt of an updated Schedule 5(a)(ix) from Seller as of the
Closing Date, in form and substance reasonably acceptable to Buyer;
 
xviii.                      Receipt of a fully executed Written Consent of
Certain Shareholders of the Seller (the “Shareholder Consent”), in a form
reasonably acceptable to Buyer, consenting to the sale by the Seller of the GP
Interests; and
 
xix.           A waiver or release by Seller of any indebtedness of GP to
Seller.
 
b)           Waiver or Termination by Buyer.  The conditions contained in
Section 5(a) hereof are inserted for the exclusive benefit of Buyer and may be
waived in whole or in part by Buyer at any time.  Such waiver must be in a
writing signed by Buyer.  The Company and Seller acknowledge that the waiver by
Buyer of any condition or any part of any condition shall constitute a waiver
only of such condition or such part of such condition, as the case may be, and
shall not constitute a waiver of any covenant, agreement, representation or
warranty made by the Company or Seller herein that corresponds or is related to
such condition or such part of such condition, as the case may be.  If any of
the conditions contained in Section 5(a) hereof are not fulfilled or complied
with as herein provided, Buyer may, at or before the Closing Date at its option,
rescind this Agreement by notice in writing to the Company and Seller and in
such event Buyer shall be released from all obligations hereunder and the
Company and Seller shall also be released from all obligations hereunder.
 
c)           Conditions Precedent to the Obligations of the Company and
Seller.  All obligations of the Company and Seller under this Agreement are
subject to the fulfillment, prior to or as of the Closing Date, of each of the
following conditions:
 
i.           The representations and warranties by or on behalf of Buyer
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true and correct in all material respects at
and as of Closing Date as though such representations and warranties were made
at and as of such time;
 
ii.           Buyer shall have performed and complied in all material respects,
with all covenants, agreements, and conditions set forth in, and shall have
executed and delivered all documents required by this Agreement to be performed
or complied with or executed and delivered by Buyer prior to or at the Closing;
 
iii.           Receipt by the Company of the Shareholder Consent;
 
iv.           Agreement with Buyer on an updated Schedule 5(a)(ix) as of the
Closing Date from Seller; and
 
 
19

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

 
 
v.           On the Closing Date, Buyer shall deliver the Purchase Price and the
other closing items specified in Section 8(b)(iii) hereof to the Company.
 
d)           Waiver or Termination by the Company or Seller.  The conditions
contained in Section 5(c) hereof are inserted for the exclusive benefit of the
Company and Seller and may be waived in whole or in part by the Company or
Seller at any time.  Such waiver must be in a signed writing.  Buyer
acknowledges that the waiver by the Company or Seller of any condition or any
part of any condition shall constitute a waiver only of such condition or such
part of such condition, as the case may be, and shall not constitute a waiver of
any covenant, agreement, representation or warranty made by Buyer herein that
corresponds or is related to such condition or such part of such condition, as
the case may be.  If any of the conditions contained in Section 5(c) hereof are
not fulfilled or complied with as herein provided, the Company or the Seller
may, at or before the Closing Date at their option, rescind this Agreement by
notice in writing to Buyer and in such event the Company and Seller shall be
released from all obligations hereunder and Buyer shall also be released from
all obligations hereunder.
 
6.           COVENANTS
 
a)           Access to Records.  Prior to the Closing Date, the corporate
financial records, minute books and other documents and records of the Company
and its Subsidiaries shall have been and will be made available to Buyer and its
representatives for inspection, subject to the confidentiality obligations set
forth in Section 6(e) below.
 
b)           Corporate Examinations and Investigations.  Prior to the Closing
Date, the parties acknowledge that they have been and will be entitled, through
their employees and representatives, to make such investigation of the assets,
properties, business and operations, books, records and financial condition of
the other as they each may reasonably require.  No investigations, by a party
hereto shall, however, diminish or waive any of the representations, warranties,
covenants or agreements of the party under this Agreement.
 
c)           Assignment of JBR GP Interests.  Prior to the Closing Date, Seller
shall cause JBR to assign its GP Interests to Buyer in accordance with the
Settlement Agreement, to be held in escrow by counsel for Buyer, subject only to
the payment of the JBR Settlement Amount on the Closing Date, either directly
from Buyer or from the Company.
 
d)           Further Assurances.  The parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby.  Each such party shall use commercially reasonable efforts to fulfill or
obtain the fulfillment of the conditions to the Closing, including, without
limitation, the execution and delivery of any documents or other papers, the
execution and delivery of which are necessary or appropriate to the Closing.
 
e)           Confidentiality.  Prior to the Closing Date and, in the event the
transactions contemplated by this Agreement are not consummated, the Company,
Seller and Buyer agree to keep strictly confidential any information disclosed
to each other in connection therewith for a period of one (1) year from the date
hereof; provided, however, such obligation shall not apply to information which:
 
 
20

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

 
 
i.           at the time of the disclosure was public knowledge;
 
ii.           after the time of disclosure becomes public knowledge (except due
to the action of the receiving party);
 
iii.           the receiving party had within its possession at the time of
disclosure;
 
iv.           is ordered disclosed by a Court or regulatory agency of proper
jurisdiction; or
 
v.           is required, in a party’s reasonable opinion based on written
advice of legal counsel, to be disclosed by applicable securities law.
 
f)           Preservation of Books and Records.  For a period of seven (7) years
after the Closing Date, Buyer shall (i) preserve and retain the corporate,
accounting, legal, auditing, tax and other books and records of the Company and
its Subsidiaries, and GP (including, but not limited to, any documents relating
to any governmental or non-governmental actions, suits, proceedings or
investigations arising out of the conduct of the business and operations of the
Company or its Subsidiaries prior to the Closing Date) and (ii) make such books
and records available at the place where such books and records are normally
maintained to Seller and its officers, employees, representatives, accountants
and auditors (collectively, “Seller Representatives”) upon reasonable notice and
at reasonable times, it being understood that Seller and Seller’s
Representatives shall be entitled to make copies of any such books and records
as it shall deem necessary.  Buyer agrees to permit Seller and Seller’s
Representatives to meet with the employees, accountants and auditors of Buyer,
the Company, GP and the Subsidiaries on a mutually convenient basis in order to
enable Seller and Seller’s Representatives to obtain additional information and
explanations of any materials provided pursuant to this Section 6(f).  Buyer
further agrees to exercise its best efforts to cause the accountants and
auditors of the Company, GP and the Subsidiaries to cooperate with and release
information to Seller as may reasonably be required for Seller to prepare
financial statements and tax returns that will require inclusion of financial or
accounting information relating to the Company, GP or the Subsidiaries.
 
7.           SURVIVAL OF REPRESENTATIONS AND WARRANTIES
 
Notwithstanding any right of either party to investigate the affairs of the
other party, each party has the right to rely fully upon representations,
warranties, covenants and agreements of the other party contained in this
Agreement or in any document delivered to one by the other or any of their
representatives, in connection with the transactions contemplated by this
Agreement.  All such representations, warranties, covenants and agreements shall
survive the execution and delivery hereof and the closing hereunder for one year
following the Closing.
 
8.           DOCUMENTS AT CLOSING AND THE CLOSING
 
a)           The Closing.  The Closing shall take place at the earliest possible
date (the “Closing Date”) after the execution of this Agreement, but in any
event not later than June 4, 2010 (as the same may be extended, the “Outside
Date”) at the offices of counsel for Buyer, Sonnenschein Nath & Rosenthal, LLP,
2000 McKinney Ave., Suite 1900, Dallas, Texas 75201, provided however, that, so
long as Buyer is not in default of any of its obligations hereunder, it shall
have the option to extend the Outside Date, in its discretion, to July 1, 2010
upon payment to the Company by wire transfer of $22,000.  The date on which the
Closing actually occurs shall be the Closing Date.
 
 
21

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

 
 
b)           Documents at Closing.  At the Closing, the following transactions
shall occur, all of such transactions being deemed to occur simultaneously:
 
i.           the Company will deliver, or will cause to be delivered, to Buyer
the following:
 
 
1.
a certificate executed by the President or Secretary of the Company to the
effect that all representations and warranties made by the Company under this
Agreement are true and correct as of the Closing, the same as though originally
given to Buyer on said date;

 
 
2.
a certificate from the State of Delaware dated at or about the Closing to the
effect that the Company is in good standing under the laws of said State;

 
 
3.
a certificate from the Commonwealth of Virginia dated at or about the Closing to
the effect that Regional is dully qualified and in good standing to do business
in the Commonwealth of Virginia;

 
 
4.
certificates representing the Newly Issued Common Units in the name of Buyer;

 
 
5.
an opinion from legal counsel to the Company acceptable to Buyer providing
favorable written opinions covering, among other things, the due authorization
and enforceability of this Agreement and the proper authorization and issuance
of the Newly Issued Common Units to Buyer pursuant to an exception from SEC
registration; and

 
 
6.
all other items, the delivery of which is a condition precedent to the
obligations of Buyer, as set forth in Section 5(a).

 
ii.           Seller will deliver, or will cause to be delivered, to Buyer the
following:
 
 
1.
a certificate executed by the President or Secretary of the Seller to the effect
that all representations and warranties made by the Seller under this Agreement
are true and correct as of the Closing, the same as though originally given to
Buyer on said date;

 
 
2.
a certificate from the State of Delaware dated at or about the Closing to the
effect that the Seller is in good standing under the laws of said State;

 
 
3.
the Shareholder Consent, executed by certain shareholders of the Seller,
consenting to the sale of the GP Interests;

 
 
22

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

 
 
 
4.
Certificates representing the GP Interests, along with duly executed powers
transferring such certificates to Buyer;

 
 
5.
an opinion from legal counsel to the Seller acceptable to Buyer providing
favorable written opinions covering, among other things, the due authorization
and enforceability of this Agreement and the proper authorization and authority
to transfer the GP Interests to Buyer; and

 
 
6.
all other items, the delivery of which is a condition precedent to the
obligations of Buyer, as set forth in Section 5(a).

 
iii.           Buyer will deliver or cause to be delivered to the Company the
following:
 
 
1.
a certificate executed by the Managing Director of Buyer to the effect that all
representations and warranties of Buyer made under this Agreement are true and
correct as of the Closing, the same as though originally given to the Company on
said date;

 
 
2.
a certificate from the State of Delaware at or about Closing to the effect that
Buyer is in good standing in Delaware;

 
 
3.
the Purchase Price (to the Company or as otherwise directed by the Company in
writing prior to the Closing) ; and

 
 
4.
all other items, the delivery of which is a condition precedent to the
obligations of the Company and Seller, as set forth in Section 5(c) plus such
other documentation as may be reasonably required in connection with the
transactions contemplated by this Agreement, including without limitation, under
the First Amended and Restated Agreement of Limited Partnership of the Company).

 
9.           POST-CLOSING
 
a)           Assistance.  Following Closing, Seller, to the extent it is in
existence, shall use commercially reasonable efforts to assist Buyer in the
operation of the Company with respect to matters which, prior to Closing, Seller
had direct involvement with.
 
10.           MISCELLANEOUS
 
a)           Waivers.  The waiver of a breach of this Agreement or the failure
of any party hereto to exercise any right under this Agreement shall in no way
constitute waiver as to future breach whether similar or dissimilar in nature or
as to the exercise of any further right under this Agreement.
 
b)           Amendment.  This Agreement may be amended or modified only by an
instrument of equal formality signed by the parties or the duly authorized
representatives of the respective parties.
 
 
23

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

 
 
c)           Assignment.  This Agreement is not assignable by the Company or
Seller with out the prior written consent of Buyer, which consent may be given
or withheld in the sole discretion of Buyer.  Buyer shall have the right to
assign this Agreement to an affiliate.
 
d)           Notice.  Until otherwise specified in writing, the mailing
addresses and fax numbers of the parties of this Agreement shall be as follows:
 
To:           the Company:
 
Rio Vista Energy Partners, L.P.
2121 Rosecrans Avenue, Suite 3355
El Segundo, California  90245
Attention:  Ian Bothwell
Fax:  310-563-6255
 
with copy to:
 
John F.F. Watkins
Reitler Kailas & Rosenblatt LLC
885 Third Avenue, 20th Floor
New York, NY 10022
Phone: 212-209-3031
Fax: 212-371-5500
 
To:           Seller:
 
Penn Octane Corporation
2121 Rosecrans Avenue, Suite 3355
El Segundo, California  90245
Attention:  Ian Bothwell
Fax:  310-563-6255
 
with copy to:
 
John F.F. Watkins
Reitler Kailas & Rosenblatt LLC
885 Third Avenue, 20th Floor
New York, NY 10022
Phone: 212-209-3031
Fax: 212-371-5500
 
To:           Buyer:
 
Central Energy, LLC
8150 North Central Express Way
Suite 1525
Dallas, Texas 75206
Attention:  Carter R. Montgomery
       Imad Anbouba
Fax: 214.378.8822
 
 
24

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

 
 
with copy to:
 
Barry F. Cannaday
Sonnenschein Nath & Rosenthal, LLP
2000 McKinney Avenue, Suite 1900
Dallas, Texas  75201
Fax:  214-259-0910
 
Any notice or statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
 
e)           Governing Law.  This Agreement shall be construed, and the legal
relations between the parties determined, in accordance with the laws of the
State of Texas, thereby precluding any choice of law rules which may direct the
application of the laws of any other jurisdiction.
 
f)           Arbitration. Any controversy relating to or arising out of this
Agreement shall be submitted to arbitration in Dallas County, Texas in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association but will not be subject to administration by the American
Arbitration Association.  Upon written demand of either party, the parties shall
meet and attempt to appoint a single Arbitrator.  If the parties fail to name an
arbitrator within ten (10) days from such demand, then the arbitrator shall be
selected from the panels of arbitrators of the American Arbitration
Association.  The arbitrator selected to act hereunder shall be qualified by
education and training to pass upon the particular question in dispute and shall
make a decision on the dispute within sixty (60) days after his appointment,
subject to any reasonable delay due to unforeseen circumstances.  The
compensation and expenses of the single arbitrator shall be borne equally by the
parties.  Arbitration may proceed in the absence of any party if notice of the
proceedings has been given to such party.  The parties agree to abide by all
awards rendered in such proceedings.
 
h)           Termination.  This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date:
 
i.           by the mutual written consent of Buyer and the Company;
 
ii.           by either of the Company or Seller:
 
 
1.
if any judgment, injunction, order or decree enjoining Seller or the Company
from consummating the transactions contemplated under this Agreement is entered;
or

 
 
2.
if, without any breach by the terminating party of its obligations under this
Agreement, the Closing Date shall not have occurred on or before the Outside
Date; or

 
 
25

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

 
 
 
3.
if, in the good faith judgment of the Board of Directors of the Company or the
Seller, the Company or the Seller, as the case may be, receives and approves a
Takeover Proposal (as defined below) that it deems superior to the transactions
contemplated under this Agreement, provided that Buyer has not exercised its
option to match any such Takeover Proposal.

 
iii.           by Buyer:
 
 
1.
if any judgment, injunction, order or decree enjoining Seller or the Company
from consummating the transactions contemplated under this Agreement is entered;
or

 
 
2.
if, without any breach by the terminating party of its obligations under this
Agreement, the Closing Date shall not have occurred on or before the Outside
Date; or

 
 
3.
if it receives a Takeover Proposal Notice (as defined below) from either the
Company or Seller, and does not exercise its option to match the Takeover
Proposal.

 
i)           Takeover Proposal.  Notwithstanding anything to the contrary in
this Agreement, in the event that, prior to the Closing Date, (i) the Company
receives an unsolicited written proposal from a third party buyer (“Third Party
Buyer”) for the sale of all or substantially all of the Company’s assets, or
control of the Company, or (ii) the Seller receives an unsolicited written
proposal from a Third Party Buyer for the sale of all or substantially all of
the Seller’s assets, or control of the GP through the purchase of the GP
Interests (such proposals to the Company or the Seller, collectively a “Takeover
Proposal”) that the independent members of the Board of Directors of the Company
or Seller believe in good faith to be bona fide and superior to the transactions
contemplated by this Agreement, following disclosure thereof to the full Board
of Directors, and (iii) after consultation with outside counsel, the independent
members of the Board of Directors of the Company or Seller determine in good
faith that the failure to take such action would be inconsistent with the
fulfillment of their fiduciary duties to the interest holders and shareholders
of the Company or Seller under applicable law, then the Company and Seller and
the independent members of their respective Board of Directors may (A)
participate in discussions or negotiations (including, as a part thereof, making
any counterproposal) with the Third Party Buyer regarding such Takeover Proposal
and (B) furnish information with respect to the Company or Seller and their
subsidiaries to the Third Party Buyer.
 
j)           Option to Match Takeover Proposal.  If the Company or the Seller
receives a Takeover Proposal prior to the Closing Date that the Board of
Directors of Seller believes in good faith to be superior to the transactions
contemplated by this Agreement, the Company or Seller shall immediately notify
Buyer, and provide Buyer with the material terms and conditions of such Takeover
Proposal, along with a copy of any agreement or proposed agreement relating to
such Takeover Proposal (the “Takeover Proposal Notice”).  Upon receipt of the
Takeover Proposal Notice, Buyer shall have the option, within seven (7) days
from its receipt of such Takeover Proposal Notice (the “Option Period”) to match
any such Takeover Proposal made by a Third Party Buyer and to thereafter
complete the transaction with Company and Seller upon the same terms and
conditions as contained in the Takeover Proposal.  If the expiration of the
Option Period should occur on or after the Outside Date, then the Outside Date
shall be extended to a date three (3) days following the expiration of the
Option Period, or such other date as the Parties may mutually agree.
 
 
26

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

 
 
k)           Break Fee.  If the Company or Seller terminate this Agreement
pursuant to Section 10(h)(ii)(3), or if Buyer terminates this Agreement pursuant
to Section 10(h)(iii)(3), then Buyer shall be entitled to receive from the
Company and Seller, a break-up fee, which shall be an amount equal to $250,000,
plus the expenses, including attorney’s fees, incurred by Buyer from the
effective date of the Letter of Intent (defined below) through the date of the
termination of this Agreement (the “Break Fee”).  The Break Fee shall be paid to
Buyer not later than the earlier of the first to occur: (x) ten (10) days
following the termination of this Agreement pursuant to either provision
identified in this Section, or (y) upon the Closing of the other transaction
with a Third Party Buyer.
 
l)           Expenses.  Except as otherwise expressly provided herein, all fees,
costs and expenses incurred by Buyer, the Company or Seller in negotiating this
Agreement or in consummating the transactions contemplated by this Agreement
shall be paid by the party incurring the same, including, without limitation,
legal and accounting fees, costs and expenses.
 
m)           Publicity.  No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by either
party hereto at any time from the signing hereof without advance approval in
writing of the form and substance by the other party, provided that the Company
shall be permitted to make such disclosures as are required by applicable
securities laws.
 
n)           Entire Agreement.  This Agreement (including Schedules to be
attached hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the subject matter hereof, and
supersede all prior agreements, written or oral, with respect thereto, except
that the parties hereto acknowledge and agree that the provisions of Paragraph 8
of that certain Letter of Intent and Agreement of Exclusivity dated March 5,
2010, as amended, between the Company and Carter Montgomery Investments and
Marjam Global Holdings, Inc. (the “Letter of Intent”) shall remain in full force
and effect.
 
o)           Headings.  The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
 
p)           Severability of Provisions.  The invalidity or unenforceability of
any term, phrase, clause, paragraph, restriction, covenant, agreement or
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
 
q)           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original copy
hereof, but all of which together shall consider but one and the same document.
 
 
27

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

 
 
r)           Binding Effect.  This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
 
s)           Tax Treatment.  the Company and Buyer acknowledge that they each
have been represented by their own tax advisors in connection with this
transaction; that none of them has made a representation or warranty to any of
the other parties with respect to the tax treatment accorded this transaction,
or the effect individually or corporately on any party under the applicable tax
laws, regulations, or interpretations; and that no opinion of counsel or private
revenue ruling has been obtained with respect to the effects of this transaction
under the Internal Revenue Code of 1986, as amended.
 
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
 
[Signatures on following page]
 
 
28

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

 
 

 
COMPANY:
     
Rio Vista Energy Partners, L.P.
     
By:
Rio Vista, GP LLC
   
its General Partner
       
By:
     
Ian T. Bothwell,
   
President and Chief Executive Officer
       
SELLER:
     
Penn Octane Corporation
     
By:
   
Name: Ian T. Bothwell
 
Title    Acting Chief Executive Officer and President
     
BUYER:
     
Central Energy, LLC
     
By:
   
Name: Carter R. Montgomery
 
Title:   Managing Member
     
By:
   
Name: Imad Anbouba
 
Title:   Managing Member

 
 
29

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