Document:

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                                                                    EXHIBIT 10.3

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                              AMENDED AND RESTATED

                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                   SYNTHETIC AMERICAN FUEL ENTERPRISES I, LLC

                          Dated as of January 28, 2003

================================================================================

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                                TABLE OF CONTENTS

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ARTICLE I DEFINITIONS.......................................................   2
Section 1.1.         Definitions............................................   2

ARTICLE II FORMATION; OFFICES; TERM.........................................  11
Section 2.1.         Formation and Continuation of the Company..............  11
Section 2.2.         Name, Office and Registered Agent......................  12
Section 2.3.         Purpose................................................  12
Section 2.4.         Term...................................................  12
Section 2.5.         Organizational and Fictitious Name Filings;
                      Presentation of Limited Liability............... .....  12
Section 2.6.         No Partnership Intended................................  13

ARTICLE III RIGHTS AND OBLIGATIONS OF THE MEMBERS...........................  13
Section 3.1.         Members; Membership Interest...........................  13
Section 3.2.         Meetings...............................................  13
Section 3.3.         Management Rights......................................  14
Section 3.4.         Other Activities.......................................  14
Section 3.5.         No Right to Withdraw...................................  14
Section 3.6.         Limitation of Liability of Members.....................  14
Section 3.7.         Deficit Upon Liquidation...............................  15
Section 3.8.         Company Property; Membership Interests.................  15
Section 3.9.         Retirement, Resignation, Expulsion, Incompetency,
                      Bankruptcy or Dissolution of a Member..... ...........  15
Section 3.10.        Exercise Under the Security Agreements.................  15

ARTICLE IV CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS..........................  16
Section 4.1.         Capital Contributions..................................  16
Section 4.2.         Written Requests.......................................  18
Section 4.3.         Capital Accounts.......................................  18
Section 4.4.         Defaulted Capital Contributions........................  18
Section 4.5.         Working Capital Loans..................................  20
Section 4.6.         No Third Party Beneficiary.............................  20
Section 4.7.         No Deficit Capital Account Restoration.................  21

ARTICLE V ALLOCATIONS.......................................................  21
Section 5.1.         Allocations............................................  21
Section 5.2.         Special Allocations....................................  21
Section 5.3.         Tax Allocations........................................  22
Section 5.4.         Transfer or Change in Company Interest.................  23

ARTICLE VI DISTRIBUTIONS....................................................  23
Section 6.1.         Distributions..........................................  23
Section 6.2.         Withdrawal of Capital..................................  23
Section 6.3.         Withholding Taxes......................................  23
Section 6.4.         Limitation upon Distributions..........................  24
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ARTICLE VII ACCOUNTING AND RECORDS..........................................  24
Section 7.1.         Fiscal Year............................................  24
Section 7.2.         Books and Records and Inspection.......................  24
Section 7.3.         Bank Accounts, Notes and Drafts........................  25
Section 7.4.         Financial Statements...................................  25
Section 7.5.         Partnership Status and Tax Elections...................  26
Section 7.6.         Company Tax Returns....................................  27
Section 7.7.         Tax Audits.............................................  27

ARTICLE VIII MANAGEMENT.....................................................  28
Section 8.1.         Management.............................................  28
Section 8.2.         Administrative Member..................................  28
Section 8.3.         Members................................................  29
Section 8.4.         Board of Managers......................................  31
Section 8.5.         Insurance..............................................  32
Section 8.6.         Duties.................................................  32
Section 8.7.         Chemical Change Testing................................  32
Section 8.8.         Limitation on Damages..................................  32
Section 8.9.         Suspension of Production...............................  32

ARTICLE IX BUDGET...........................................................  33
Section 9.1.         Preparation............................................  33
Section 9.2.         Content................................................  33
Section 9.3.         Amendments and Supplements.............................  33

ARTICLE X TRANSFERS; RIGHT OF FIRST REFUSAL, PUT RIGHT......................  33
Section 10.1.        Prohibited Transfers...................................  33
Section 10.2.        Conditions to Transfer by MHSI.........................  33
Section 10.3.        Conditions of Transfer by Buyer........................  34
Section 10.4.        Indirect Transfers.....................................  35
Section 10.5.        Right of First Refusal.................................  35
Section 10.6.        Admission..............................................  35
Section 10.7.        Future Cooperation.....................................  35
Section 10.8.        Put and Redemption Rights..............................  36

ARTICLE XI DISSOLUTION AND WINDING-UP.......................................  36
Section 11.1.        Events of Dissolution..................................  36
Section 11.2.        Distribution of Assets.................................  37
Section 11.3.        In-Kind Distributions..................................  37
Section 11.4.        Certificate of Cancellation............................  37

ARTICLE XII MISCELLANEOUS...................................................  37
Section 12.1.        Notices................................................  37
Section 12.2.        Amendment..............................................  38
Section 12.3.        Partition..............................................  38
Section 12.4.        Waivers and Modifications..............................  38
Section 12.5.        Severability...........................................  38
Section 12.6.        Successors; No Third-Party Beneficiaries...............  39
Section 12.7.        Entire Agreement.......................................  39
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<S>                                                                          <C>
Section 12.8.        Public Announcements...................................  39
Section 12.9.        Governing Law..........................................  39
Section 12.10.       Further Assurances.....................................  39
Section 12.11.       Counterparts...........................................  39
Section 12.12.       Consent to Jurisdiction................................  39
Section 12.13.       Confidentiality........................................  40
Section 12.14.       Joint Efforts..........................................  41
Section 12.15.       Specific Performance...................................  41
Section 12.16.       Survival...............................................  41
Section 12.17.       Construction...........................................  41
Section 12.18.       Other Activities.......................................  41
Section 12.19.       Effective Date.........................................  41

SCHEDULES
    Schedule 1.1                  Tax Credit Methodology
    Schedule 8.3(a)               Consent Recipients
    Schedule 8.3(a)(xv)           Chemical Reagent Concentrations
    Schedule 8.3(a)(xix)          Requirements for Specific Member Approval
    Schedule 8.3(a)(xviii)        Testing Protocol

EXHIBITS
    Exhibit A                     Members, Initial Capital Contributions,
                                  Initial Capital Account Balances & Membership
                                  Interests
    Exhibit B                     Board of Managers of the Company
    Exhibit C                     Budget of the Company
    Exhibit D                     Reconveyance Representations and Warranties
    Exhibit E                     Capital Contribution Schedule
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                              AMENDED AND RESTATED
                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                   SYNTHETIC AMERICAN FUEL ENTERPRISES I, LLC

                THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
(this "Agreement") of Synthetic American Fuel Enterprises I, LLC, a Delaware
limited liability company (the "Company"), is made and entered into as of
January 28, 2003, by and among Synthetic American Fuel Enterprises Holdings,
Inc., an Oregon corporation ("Holdings"), Marriott Hotel Services, Inc., a
Delaware corporation ("MHSI"), and Serratus LLC a Delaware limited liability
company ("Buyer" and collectively with Holdings and MHSI, the "Members")

                              W I T N E S S E T H :

                WHEREAS, the Company was formed by virtue of its Articles of
Organization filed with the Secretary of State of the State of Oregon on
November 20, 1996, as amended on November 21, 2001 to change the name of the
Company from Birmingham SynFuel LLC to Synthetic American Fuel Enterprises I,
LLC, and is governed by the Operating Agreement of the Company, effective as of
November 20, 1996, between Birmingham Syn Fuel I, Inc. ("BSF I") and Birmingham
Syn Fuel II, Inc. ("BSF II"), as amended by the First Amendment to Operating
Agreement of the Company between BSF I and BSF II, effective as of October 14,
2001 (collectively, the "Original Operating Agreement");

                WHEREAS, the Company converted to a Delaware limited liability
company by virtue of its Certificate of Formation and Certificate of Conversion
filed with the Secretary of State of the State of Delaware on December 19, 2002;

                WHEREAS, the Company owns the synthetic fuel production facility
located at the Willow Lake mine near Harrisburg, Illinois;

                WHEREAS, Buyer currently owns 0.1% Membership Interest in the
Company;

                WHEREAS, pursuant to the Agreement for Purchase of Membership
Interest among MHSI, Holdings and Buyer dated January 28, 2003 (the "Purchase
Agreement"), Holdings has agreed to sell to Buyer effective as of the Closing
Date a 48.8% Membership Interest; and

                WHEREAS, the parties hereto desire for Buyer to be admitted as a
member of the Company and for the Original Operating Agreement to be amended and
restated as stated herein.

                NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend, restate and replace the Original Operating Agreement in its
entirety and to continue the Company as a limited liability company under the
Act upon the following terms and conditions:

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                                    ARTICLE I
                                   DEFINITIONS

        Section 1.1.    Definitions. Unless otherwise defined herein,
capitalized terms used throughout this Agreement shall have the respective
meanings set forth below:

                "Account" shall mean an account of the Company, as designated in
writing by the Administrative Member no later than five Business Days prior to
the first applicable Monthly Payment Date after the Closing Date, or such other
account as the Administrative Member shall designate in writing no later than
ten Business Days prior to the next applicable Monthly Payment Date at any time
following the Closing Date.

                "Accounting Firm" means the Company's primary independent
accounting firm, which shall be Deloitte & Touche or such other "Final 4" firm
of certified public accountants (i.e., Ernst & Young, KPMG Peat Marwick or
PricewaterhouseCoopers) selected by the Administrative Member.

                "Administrative Member" has the meaning set forth in Section 8.2
hereof.

                "Act" means the Delaware Limited Liability Company Act, Delaware
Code Ann. 6, Sections 18-101, et seq. and any successor statute, as the same may
be amended from time to time.

                "Affiliate" of a specified Person means any Person that directly
or indirectly through one or more intermediaries controls, is controlled by, or
is under common control with, such specified Person. As used in this definition
of Affiliate, the term "control" of a specified Person including, with
correlative meanings, the terms, "controlled by" and "under common control
with," means (a) the ownership, directly or indirectly, of 50 percent or more of
the equity interest in a Person or (b) the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise; provided, however, that
notwithstanding the foregoing, for purposes of this Agreement, the Company will
be deemed not to be an Affiliate of any Member.

                "Agreement" has the meaning set forth in the introductory
paragraph hereof, as the same may be amended from time to time.

                "Anticipated Tax Credits" means, at any point in time, the
future Tax Credits reasonably anticipated to result from sales by the Company of
solid synthetic fuel produced in the Facility after such time through December
31, 2007.

                "Applicable Percentage" means 119 percent.

                "Assignment Agreement" means the Assignment of Membership
Interest, of even date herewith, by and between Buyer and Holdings.

                "Bankruptcy" of a Person means the occurrence of any of the
following events: (i) the filing by such Person of a voluntary case or the
seeking of relief under any chapter of Title 11 of the United States Bankruptcy
Code, as now constituted or hereafter amended (the

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"Bankruptcy Code"), (ii) the making by such Person of a general assignment for
the benefit of its creditors, (iii) the admission in writing by such Person of
its inability to pay its debts as they mature, (iv) the filing by such Person of
an application for, or consent to, the appointment of any receiver or a
permanent or interim trustee of such Person or of all or any portion of its
property, including the appointment or authorization of a trustee, receiver or
agent under applicable law or under a contract to take charge of its property
for the purposes of enforcing a lien against such property or for the purpose of
general administration of such property for the benefit of its creditors, (v)
the filing by such Person of a petition seeking a reorganization of its
financial affairs or to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or
an answer admitting the material allegations of a petition filed against it in
any proceeding under any such law or statute, (vi) an involuntary case is
commenced against such person by the filing of a petition under any chapter of
Title 11 of the Bankruptcy Code and within 60 days after the filing thereof
either the petition is not dismissed or the order for relief is not stayed or
dismissed, (vii) an order, judgment or decree is entered appointing a receiver
or a permanent or interim trustee of such Person or of all or any portion of its
property, including the entry of an order, judgment or decree appointing or
authorizing a trustee, receiver or agent to take charge of the property of such
Person for the purpose of enforcing a lien against such property or for the
purpose of general administration of such property for the benefit of the
creditors of such Person, and such order, judgment or decree shall continue
unstayed and in effect for a period of 60 days, or (viii) an order, judgment or
decree is entered, without the approval or consent of such Person, approving or
authorizing the reorganization, insolvency, readjustment of debt, dissolution or
liquidation of such Person under any such law or statute, and such order,
judgment or decree shall continue unstayed and in effect for a period of 60
days. The foregoing definition of "Bankruptcy" is intended to replace and shall
supersede the definition of "Bankruptcy" set forth in Sections 18-101(1) and
18-304 of the Act.

                "Base Note" means the Base Note under the Purchase Agreement.

                "Board of Managers" has the meaning set forth in Section 8.4
hereof.

                "BTU" means British thermal unit.

                "Budget" has the meaning set forth in Section 9.1 hereof.

                "Business Day" means any day other than Saturday, Sunday and any
day that is a legal holiday or a day on which banking institutions in New York
are authorized by law or governmental action to close.

                "Buyer" has the meaning set forth in the introductory paragraph
hereof.

                "Buyer Parent" shall mean ___________________, a Delaware
corporation.

                "Buyer Parent Guaranty" means the Guaranty, dated of even date
herewith, executed by Buyer Parent in favor of MHSI and the Company.

                "Buyer Security Agreement" means the Pledge and Security
Agreement, of even date herewith, by Buyer in favor of MHSI and the Company.

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                "Capital Account" has the meaning set forth in Section 4.3(a)
hereof.

                "Capital Contribution" means, with respect to any Member, the
amount of money and the initial Gross Asset Value of any property contributed to
the Company with respect to the Membership Interest in the Company held or
purchased by such Member.

                "Capital Contribution Schedule" has the meaning set forth in
Section 4.1(b) hereof.

                "Capital Interest" means 1.1% as to Holdings, 50% as to MHSI and
48.9% as to the Buyer, as adjusted upon any transfer as provided herein.

                "Cleared Person" means the Tennessee Valley Authority, Tampa
Electric Company, Alabama Power Company and any Person as to which Buyer
notifies MHSI (or is deemed to have notified MHSI) is a Cleared Person in the
Customer Certificate pursuant to Section 2.5(f) of the Purchase Agreement, such
Person to constitute a Cleared Person for purposes hereof as of the date of such
Customer Certificate and at all times prior thereto.

                "Closing Date" has the meaning set forth in the Purchase
Agreement.

                "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

                "Commercial Paper Rate" means, for each day that any payment
obligation hereunder is outstanding, the most recent published yield on
commercial paper with the shortest quoted period of not fewer than 30 days
placed by dealers, as reported for each such day either in the Federal Reserve
Rate Report that customarily appears in the Friday issue of The Wall Street
Journal (Eastern Edition) under "Money Rates" or, if such report does not so
appear, in such other nationally recognized publication or electronic data
service as the Members may, from time to time, agree on. On days when such a
rate is not reported, the most recently reported rate on a preceding day will be
deemed to be the applicable rate.

                "Company" has the meaning set forth in the introductory
paragraph hereof.

                "Confidential Information" has the meaning set forth in Section
12.13 hereof.

                "Consultation" or "Consult" means to confer with, and reasonably
consider and take into account the reasonable suggestions, comments or opinions
of another Person.

                "Customer Certificate" has the meaning given to such term in
Section 2.5(f) of the Purchase Agreement.

                "Default Rate" has the meaning set forth in Section 4.4(a)(ii)
hereof.

                "Defaulting Member" has the meaning set forth in Section 4.4(a)
hereof.

                "Depreciation" means for each Fiscal Year or part thereof, an
amount equal to the depreciation, amortization, or other cost recovery deduction
allowable for United States federal income tax purposes with respect to an asset
for such Fiscal Year or part thereof, except that if

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the Gross Asset Value of an asset differs from its adjusted basis for United
States federal income tax purposes at the beginning of such Fiscal Year, the
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year or part thereof shall be an amount which bears the same ratio to such Gross
Asset Value as the United States federal income tax depreciation, amortization,
or other cost recovery deduction for such Fiscal Year or part thereof bears to
such adjusted tax basis. If such asset has a zero adjusted tax basis, the
depreciation, amortization, or other cost recovery deduction for each taxable
year shall be determined under a method reasonably selected by the
Administrative Member.

                "Encumbrance" means any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, mortgage,
security interest, right of first refusal or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income or exercise of any
other attribute of ownership.

                "Environmental Law" means any applicable federal, state, local
or other governmental Legal Requirement governing or relating to (a) the
environment or natural resources, (b) human health and safety, (c) releases or
threatened releases of Hazardous Materials including, without limitation,
investigations, monitoring and abatement of such releases, or (d) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Materials or materials containing Hazardous Materials.

                "Estimated Tax Credits" means, with respect to any period after
the Closing Date, the estimated Tax Credits generated during such period as a
result of the production of solid synthetic fuel at the Facility and the sale of
such synthetic fuel to unrelated persons that are allocable to Buyer in respect
of Buyer's ownership of its Membership Interest which estimate shall be made in
accordance with the methodology set forth in Schedule 1.1; provided, however,
that Excluded Sales will not be taken into account.

                "Event of Default" has the meaning set forth in Section 4.4(a)
hereof.

                "Excluded Sales" means (a) sales of Pre-Sale Inventory, and (b)
sales to any MS Related Person that is not a Cleared Person.

                "Expected Closing Date" means July 1, 2003.

                "Facility" means the Company's synthetic fuel production
facility located at the Willow Lake mine near Harrisburg, Illinois.

                "Fiscal Year" has the meaning set forth in Section 7.1 hereof.

                "Fixed Deferred Payments" means the applicable amount set forth
on Schedule 2.4 of the Purchase Agreement.

                "GAAP" means United States generally accepted accounting
principles as in effect from time to time, consistently applied throughout the
specified period.

                "Governmental Body" means the federal government of the United
States, any state of the United States or political subdivision thereof, and any
entity exercising executive,

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legislative, judicial, regulatory or administrative functions of or pertaining
to government and any other governmental entity, instrumentality, agency,
authority, commission or self-regulatory organization.

                "Gross Asset Value" means, with respect to any asset, the
asset's adjusted tax basis for federal income tax purposes, except as follows:

                (a)     the initial Gross Asset Value of any asset contributed
by a Member to the Company shall be the gross fair market value of such asset as
of the date of contribution;

                (b)     the Gross Asset Values of all Company assets shall be
adjusted to equal their respective fair market values as of the following times:
(i) the acquisition of an additional Membership Interest in the Company by any
new or existing Member in exchange for more than a de minimis Capital
Contribution; (ii) the distribution by the Company to a Member of more than a de
minimis amount of money or Company property as consideration for a Membership
Interest in the Company; and (iii) the liquidation of the Company within the
meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); provided, however,
that adjustments pursuant to clauses (i) and (ii) shall be made only if the
Administrative Member reasonably determines, after Consultation with the
Members, that such adjustments are necessary or appropriate to reflect the
relative economic interests of the Members in the Company;

                (c)     the Gross Asset Value of any item of Company assets
distributed to any Member shall be adjusted to equal the gross fair market value
of such asset on the date of distribution;

                (d)     the Gross Asset Values of all Company assets shall be
adjusted to reflect any adjustments to the adjusted basis of such assets
pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that
such adjustments are required to be taken into account in determining Capital
Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m);
provided, however, that Gross Asset Values shall not be adjusted pursuant to
this subsection (d) to the extent that the Administrative Member determines that
an adjustment pursuant to subsection (b) is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subsection (d); and

                (e)     if the Gross Asset Value of an asset has been determined
or adjusted pursuant to subsection (a), (b) or (d) above, such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into account with respect
to such asset.

                "Hazardous Materials" means any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls ("PCBs") and any other
chemicals, materials or substances which are now or hereafter become defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances" or "toxic pollutants" under, or are regulated or
become regulated as such by Environmental Laws, including, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Section

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9601 et seq.); the Hazardous Material Transportation Act, as amended (42 U.S.C.
Section 1801 et seq.); the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Section 6901 et seq.); the Toxic Substances Control Act, as amended
(15 U.S.C. Section 2601); the Clean Air Act, as amended (42 U.S.C. Section 7401
et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. Section
1251 et seq.); SMCRA; or in the regulations promulgated pursuant to any of said
laws.

                "Holdings" has the meaning set forth in the introductory
paragraph hereof.

                "Independent Chemist" means Paspek Consulting LLC, or such other
chemist as may be chosen by the Members of the Company from time to time.

                "IRS" means the Internal Revenue Service or any successor agency
thereto.

                "Legal Requirement" means any law (including common law),
statute, act, decree, ordinance, rule, directive (to the extent having the force
of law) order, treaty, code or regulation (including any of the foregoing
relating to health or safety matters or any Environmental Law) or any
interpretation of any of the foregoing, as enacted, issued or promulgated by any
Governmental Body, including all amendments, modifications, extensions,
replacements or re-enactments thereof.

                "Low Volume Period" means any Quarter during which aggregate
sales (not counting Excluded Sales) of synthetic fuel produced at the Facility
fall below 175,000 tons (for any reason, including, without limitation, a force
majeure event).

                "Manager" means Synfuel Management, LLC, a Kentucky limited
liability company, which is the operator under the O&M Agreement. The Manager is
a "manager" of the Company within the meaning of the Act.

                "Member" or "Members" means the "Members" (as such term is
defined in the introductory paragraph hereof) in their capacity as "members" of
the Company within the meaning of the Act, and any other Person that has been
admitted as a member of the Company pursuant to the terms hereof.

                "Membership Interest" means the limited liability company
interest of a Member in the Company, which shall include the Capital Interest
set forth in Exhibit A hereto, and a Member's share of the income, gain,
credits, deductions and losses of the Company and a Member's rights to receive
distributions (in liquidation or otherwise) and allocations under this
Agreement, and which interest entitles such Member to receive information and to
consent to or approve such actions or omissions of the Company or another Member
with respect to which the consent or approval of such Member is permitted or
expressly required hereunder or required under the Act, and all other rights and
obligations of such Member.

                "MHSI" has the meaning set forth in the introductory paragraph
hereof.

                "MMBTU" means one million BTUs.

                "Monthly Capital Contribution" means, with respect to any
Member, the monthly Capital Contributions to be made as provided in Section
4.1(b) hereof.

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                "Monthly Payment Date" means the tenth calendar day after the
receipt of Capital Contribution Schedule, or, if such day is not a Business Day,
on the next succeeding Business Day.

                "Non-Defaulting Members" has the meaning set forth in Section
4.4(a) hereof.

                "Notice" has the meaning set forth in Section 12.1 hereof.

                "O&M Agreement" means the Operation and Maintenance Agreement,
dated as of October 15, 2001, as amended, among the Company, Synthetic American
Fuel Enterprises II, LLC and the Operator.

                "Operations Report" means that certain report caused to be
issued by the Administrative Member pursuant to Section 2.5(b) of the Purchase
Agreement.

                "Operator" means Synfuel Management, LLC, a Kentucky limited
liability company, or any successor thereto.

                "Original Operating Agreement" has the meaning set forth in the
recitals.

                "Permitted Encumbrance" means Encumbrances provided for under
the Project Documents and liens for Taxes not yet due and payable.

                "Permitted Investments" means (a) domestic or eurodollar time
deposits, money market instruments or certificates of deposit with banks rated
at least "A" by Standard & Poor's Ratings Services or Moody's Investors
Services, Inc.; (b) commercial paper of industrial corporations rated at least
"A-1" by Standard & Poor's Ratings Services or "P-1" by Moody's Investors
Services, Inc.; (c) direct obligations of, or obligations unconditionally
guaranteed by, the United States of America or an agency or instrumentality
thereof and backed by the full faith and credit of the United States of America;
or (d) mutual funds that invest primarily in the securities described in (a)
through (c) above.

                "Person" means any corporation, limited liability company, any
form of partnership, any joint venture, trust, estate, Governmental Body or
other legal or commercial entity or any natural person.

                "Pre-Sale Inventory" means the Company's inventory of synthetic
fuel held for sale as of the Closing Date.

                "Pre-Sale Items" has the meaning set forth in Section 5.1(c)
hereof.

                "Prime Rate" means, for each day that any payment obligation
hereunder is outstanding, the most recent published prime rate, as reported for
each such day either in The Wall Street Journal (Eastern Edition) under "Money
Rates" or, if such rate does not so appear, in such other nationally recognized
publication on which the Members may, from time to time, agree. On days when
such a rate is not reported, the most recently reported rate on a preceding day
will be deemed to be the applicable rate.

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                "Private Letter Ruling" means the private letter ruling that the
Internal Revenue Service issues in response to the Request.

                "Project Documents" means all agreements relating to the
Facility or the production and sale of synthetic fuel to which the Company is a
party.

                "Prudent Operating Standards" means those standards, methods and
acts which (a) when engaged in are commonly used in prudent engineering
maintenance and operations of synthetic fuel production facilities and
associated mechanical and handling facilities and equipment lawfully and with
safety, reliability, efficiency and expedition or (b) in the exercise of
reasonable judgment considering the facts known when engaged in, could have been
expected to achieve the desired result consistent with applicable law, safety,
reliability, efficiency and expedition. Prudent Operating Standards are not
limited to the optimum practice, method or act, but rather are a spectrum of
reasonably possible practices, methods or acts.

                "Purchase Agreement" has the meaning set forth in the recitals.

                "Purchase Price" has the meaning ascribed to it in the Purchase
Agreement.

                "Quarter" means the periods corresponding to one fourth of a
full Fiscal Year of the Operating Company (which shall be three month periods if
such Fiscal Year is based on a 365 day year, and periods of thirteen or fourteen
weeks if such Fiscal Year is a 52-53 week year), or the applicable portion of
such periods in the case of any short Fiscal Year.

                "Quarterly Maximum Production" means not more than 640,000 Tons
of synthetic fuel in any Quarter.

                "Quarterly Minimum Production" means not less than 312,500 Tons
of synthetic fuel in any Quarter.

                "Representatives" means, with respect to any Person, the
managing member(s), the officers, directors, employees, representatives or
agents (including investment bankers, financial advisors, attorneys,
accountants, brokers and other advisors) of such Person, to the extent that such
officer, director, employee, representative or agent of such Person is acting in
his or her capacity as an officer, director, employee, representative or agent
of such Person.

                "Request" means the request for the Private Letter Ruling
submitted to the IRS on behalf of the Company as soon as practicable after the
date hereof, as supplemented from time to time thereafter, requesting the
rulings described in Section 2.9(b) of the Purchase Agreement.

                "Secured Parties" means Buyer and the Company.

                "Seller Parent" means Marriott International, Inc., a Delaware
corporation.

                "Seller Parent Guaranty" means the Guaranty, of even date
herewith, made by Seller Parent in favor of Buyer.

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<PAGE>

                "Seller Security Agreement" means the Pledge and Security
Agreement, of even date herewith, made by MHSI in favor of Buyer and the
Company.

                "Sharing Ratio" means (i) for the period from the Closing Date
through December 31, 2003, 8.9% for MHSI, 1.1% for Holdings, and 90.0% for
Buyer; and (ii) for all other periods, 48.8% for MHSI, 1.1% for Holdings and
50.1% for Buyer; provided, however, that if the Closing Date is not the Expected
Closing Date, the Sharing Ratio in clause (i) shall be appropriately adjusted by
mutual agreement of Buyer and MHSI; and provided further that if, in any
Quarter, the Administrative Member proposes to produce less than 450,000 tons of
synthetic fuel, then the Members shall discuss in good faith an appropriate
change in the Sharing Ratio for that Quarter.

                "SMCRA" shall mean the Surface Mining Control and Reclamation
Act of 1977, as amended 30 U.S.C. Sections 1201 et seq., or any federal or state
regulations or regulatory programs promulgated pursuant thereto.

                "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means:

                        (i)     any federal, state, local or foreign net income,
gross income, gross receipts, windfall profit, severance, property, production,
sales, use, license, excise, franchise, net worth, employment, payroll
withholding, alternative or add-on minimum, ad valorem, transfer, stamp, or
environmental tax, or any other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to tax or additional amount imposed by any Governmental Body;
and

                        (ii)    any liability for the payment of amounts with
respect to payment of a type described in clause (i), including as a result of
being a member of an affiliated, consolidated, combined or unitary group, as a
result of succeeding to such liability as a result of merger, conversion or
asset transfer or as a result of any obligation under any tax sharing
arrangement or tax indemnity agreement.

                "Tax Credits" means the tax credits provided by Section 29(a) of
the Code with respect to the sale of synthetic fuel produced by the Facility.

                "Tax Event" means (i) the issuance of a revenue agent's report
or notice of deficiency to the Company that proposes the disallowance of 50
percent or more of the Tax Credits claimed during the period covered by the
audit; (ii) the revocation by the IRS of any of the three rulings in the Private
Letter Ruling, provided that the revocation is no longer eligible for any formal
appeal, review or modification through administrative proceedings; (iii) the
enactment (or, if later, 60 days before, the effective date) of legislation that
would (A) disallow 50 percent or more of the Anticipated Tax Credits, or (B)
reduce the maximum federal corporate income tax rate to 30 percent or less; (iv)
the issuance by the IRS of a regulation, notice, or other administrative action
with similar effect of law that would disallow 50 percent or more of the
Anticipated Tax Credits; or (v) a decision by a federal court that would (if
applied to the Company) result in the disallowance of 50% or more of the
Anticipated Tax Credits, but only if Buyer submits a written opinion of
Chadbourne & Parke LLP or other nationally recognized tax counsel (rendered
after consultation in good faith with MHSI's tax counsel) stating that the legal

                                       10

<PAGE>

reasoning in such decision should, if applied to the facts of the Company, have
such effect. In addition, if legislation is enacted after January 28, 2003 that
causes dividends to be fully or partly excluded from federal income taxes, then
a Tax Event shall have occurred, but only if by claiming Tax Credits, a
corporation would reduce the amount of dividends for which its shareholders
would qualify for the exclusion by at least y% of the Tax Credits claimed. For
this purpose, y% = 25% x ((1 - Tax Rate)/Tax Rate).

                "Tax Matters Partner" has the meaning set forth in Section
7.7(a) hereof.

                "Tax Rate" means the highest marginal federal income tax rate
for corporations under Section 11 of the Code expressed as a percentage.

                "Tax Return" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including any information return, claim for refund, amended return
or declaration of estimated Tax.

                "Termination Date" has the meaning set forth in Section 2.4
hereof.

                "Ton" means two thousand (2,000) pounds.

                "Transaction Agreements" means this Agreement, the Purchase
Agreement, the Seller Parent Guaranty, the Buyer Parent Guaranty, the Buyer
Security Agreement, the Seller Security Agreement and the Assignment Agreement.

                "Transfer" has the meaning set forth in Section 10.1 hereof.

                "Transfer Notice" has the meaning set forth in Section 10.5
hereof.

                "Treasury Regulations" or "Treas. Reg." means the regulations
promulgated under the Code, as such regulations are in effect on the date
hereof.

                "UCC" means the Uniform Commercial Code of any applicable
jurisdiction.

                "Working Capital Loans" has the meaning given to such term in
Section 4.5 hereof.

                                   ARTICLE II
                            FORMATION; OFFICES; TERM

        Section 2.1.    Formation and Continuation of the Company. The Company
was formed on November 20, 1996, by virtue of the filing of its Articles of
Organization with the Secretary of State of the State of Oregon. The Company was
converted to a Delaware limited liability company pursuant to the Act by virtue
of the filing of a Certificate of Formation and a Certificate of Conversion with
the Secretary of State of the State of Delaware on December 19, 2002. The
Members hereby acknowledge the continuation of the Company as a limited
liability company pursuant to the Act. Jeff B. Stant is hereby designated as an
"authorized person" within the meaning of the Act, and has executed, delivered
and filed the Certificate of Formation and the

                                       11

<PAGE>

Certificate of Conversion of the Company with the Delaware Secretary of State on
December 19, 2002, and such execution, delivery and filing is hereby approved
and ratified.

        Section 2.2.    Name, Office and Registered Agent.

                (a)     The name of the Company shall be "Synthetic American
Fuel Enterprises I, LLC" or such other name or names as may be agreed to by the
Members from time to time. The principal office of the Company shall be 10400
Fernwood Rd., Bethesda, MD 20817. The Members may at any time change the
location of such office to another location, provided that the Administrative
Member gives prompt written notice of any such change to the registered agent of
the Company.

                (b)     The registered office of the Company in the State of
Delaware is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware.
The registered agent of the Company for service of process at such address is
The Prentice Hall Corporation System. The registered office and registered agent
may be changed by the Administrative Member at any time in accordance with the
Act provided that the Administrative Member gives prompt written notice of any
such change to all Members. The registered agent's primary duty as such is to
forward to the Company at its principal office and place of business any notice
that is served on it as registered agent.

        Section 2.3.    Purpose. The sole purpose of the Company is to own and
operate the Facility, and otherwise to do all things reasonably necessary or
advisable in connection therewith, including the procurement of coal feedstock
and the sale of synthetic fuel. The Members acknowledge that the primary
business objective of the Company is, consistent with good engineering,
operating, safety, environmental and commercial practices, to operate the
Facility so as to produce and sell coal-based synthetic fuel to unrelated
parties. The Company may engage in any kind of activity and perform and carry
out contracts of any kind necessary to, or in connection with or convenient or
incidental to, the accomplishment of such purpose, so long as such activities
and contracts may be lawfully carried on or performed by a limited liability
company under the laws of the State of Delaware.

        Section 2.4.    Term. The term of the Company commenced on November 20,
1996, and shall continue until June 30, 2008, or such earlier date that the
Company is dissolved in accordance with the terms hereof or as otherwise
provided by law (the "Termination Date").

        Section 2.5.    Organizational and Fictitious Name Filings; Presentation
of Limited Liability. The Administrative Member shall cause the Company to
register as a foreign limited liability company and file such fictitious or
trade names, statements or certificates in such jurisdictions and offices as
necessary or appropriate for the conduct of the Company's operation of its
business. The Administrative Member may take any and all other actions as may be
reasonably necessary or appropriate to perfect and maintain the status of the
Company as a limited liability company or similar type of entity under the laws
of Delaware and any other state or jurisdiction other than Delaware in which the
Company engages in business and continue the Company as a limited liability
company and to protect the limited liability of the Members as contemplated by
the Act.

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<PAGE>

        Section 2.6.    No Partnership Intended. Other than for purposes of
determining the status of the Company under the Code and the applicable Treasury
Regulations and under any applicable state, municipal or other income tax law or
regulation, the Members intend that the Company not be a partnership, limited
partnership or joint venture and this Agreement shall not be construed to
suggest otherwise.

                                   ARTICLE III
                      RIGHTS AND OBLIGATIONS OF THE MEMBERS

        Section 3.1.    Members; Membership Interest. Buyer acquired a 0.1%
Membership Interest in the Company and was admitted as a Member on January 3,
2003. Pursuant to the Purchase Agreement and related Assignment Agreement, Buyer
acquired a 48.8% Membership Interest in the Company from Holdings on the Closing
Date. Notwithstanding any other provisions of this Agreement, the parties hereto
ratify and approve the transfer of the 48.9% Membership Interest. Holdings, MHSI
and Buyer hereby continue as Members. The Company shall have as Members only
those other Persons as may be properly admitted as a Member pursuant to the
terms hereof in addition to or as assignees of the Members. The name, address,
initial Capital Account balance, and the Capital Interest of each Member shall
be as shown on Exhibit A attached hereto and the Administrative Member, without
the consent of any other person, is hereby authorized to, and shall update
Exhibit A from time to time as necessary to reflect accurately the information
therein. Any reference in this Agreement to Exhibit A shall be deemed to be a
reference to Exhibit A as amended and in effect from time to time. If a Member
transfers all of its Membership Interest to another Person pursuant to and in
accordance with the terms hereof, the transferor shall automatically cease to be
a Member.

        Section 3.2.    Meetings.

                (a)     Except as otherwise permitted by this Agreement, all
actions of the Members shall be taken at meetings of the Members which may be
called by any Member for any reason and shall be called by the Administrative
Member within ten days following the written request of a Member. The Members
may conduct any Company business at such meeting that is permitted under the Act
or this Agreement. Meetings shall be at a reasonable time and place. Accurate
minutes of any meeting shall be taken and filed with the minute books of the
Company.

                (b)     With respect to meetings of the Members, the presence in
person or by proxy of Members owning 60 percent of the aggregate Membership
Interests entitled to vote at such meeting shall constitute a quorum for
purposes of transacting business at any meeting of the Members. With respect to
those matters required or permitted to be voted upon by the Members, the
affirmative vote of Members owning 60 percent of the Membership Interests shall
be required to approve any such matter, in addition to any other approval
required by this Agreement or the Act. Solely for purposes of any vote by the
Members hereunder (including Section 8.3 hereof), Buyer shall be deemed to hold
50% of the Membership Interests and MHSI and Holdings shall together be deemed
to hold 50% of the Membership Interests. Members may participate in a meeting of
the Members by means of conference telephone or similar communications equipment
so that all persons participating in the meeting can hear each other or

                                       13

<PAGE>

by any other means permitted by law. Such participation shall constitute
presence in person at such meeting.

                (c)     Written notice stating the place, day and hour of the
meeting of the Members, and the purpose or purposes for which the meeting is
called, shall be delivered either personally, via facsimile or by mail, by or at
the written direction of the Administrative Member, to each Member of record
entitled to vote at such meeting not less than five Business Days nor more than
30 days prior to the meeting. Notwithstanding the foregoing, meetings of the
Members may be held without notice so long as all the Members are present in
person or by proxy.

                (d)     Any action may be taken by the Members without a meeting
if such action is authorized or approved by the written consent of all Members.
In no instance where action is authorized by written consent need a meeting of
Members be called or noticed; however, a copy of the action taken by written
consent must be sent promptly to all Members and all actions by written consent
shall be filed with the minute books of the Company. Following each meeting, the
minutes of the meeting shall be sent to each Member.

        Section 3.3.    Management Rights. Except as otherwise provided herein,
and for the avoidance of doubt, no Member shall have any right, power or
authority to take part in the management or control of the business of, or
transact any business for, the Company, to sign for or on behalf of the Company
or to bind the Company in any manner whatsoever. The Manager shall not hold out
or represent to any third party that any Member has any such power or right or
that any Member is anything other than a member in the Company. A Member shall
not be deemed to be participating in the control of the business of the Company
by virtue of its possessing or exercising any rights set forth in this Agreement
or the Act or any other agreement relating to the Company.

        Section 3.4.    Other Activities. Notwithstanding any duty otherwise
existing at law or in equity, any Member or Manager may engage in or possess an
interest in other business ventures of every nature and description,
independently or with others, even if such activities compete directly with the
business of the Company, and neither the Company nor any of the Members shall
have any rights by virtue of this Agreement in and to such independent ventures
or the profits derived from them.

        Section 3.5.    No Right to Withdraw. Except as otherwise provided in
Article X of this Agreement, no Member shall have any right to voluntarily
resign or otherwise withdraw from the Company without the prior written consent
of all remaining Members of the Company, in their sole and absolute discretion.

        Section 3.6.    Limitation of Liability of Members. Each Member's
liability shall be limited as set forth in the Act and other applicable law.
Except as otherwise required by the Act, the debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise, shall be the
debts, obligations and liabilities solely of the Company, and the Members of the
Company shall not be obligated personally for any of such debts, obligations or
liabilities solely by reason of being a Member of the Company. In no event shall
any Member or Manager be liable under this Agreement to another Member for any
lost profits of, or any consequential,

                                       14

<PAGE>

punitive, special or incidental damages incurred by, such Member arising from a
breach of this Agreement, provided that this shall in no way limit any such
liability of a Member or the Manager to another Member under any other
Transaction Agreement.

        Section 3.7.    Deficit Upon Liquidation. Except to the extent otherwise
provided by law with respect to third-party creditors of the Company, upon
liquidation, none of the Members shall be liable to the Company for any deficit
in its Capital Account, nor shall such deficits be deemed assets of the Company.

        Section 3.8.    Company Property; Membership Interests. All property
owned by the Company, whether real or personal, tangible or intangible and
wherever located, shall be deemed to be owned by the Company and no Member,
individually, shall have any ownership of such property. The Membership
Interests shall constitute personal property.

        Section 3.9.    Retirement, Resignation, Expulsion, Incompetency,
Bankruptcy or Dissolution of a Member. The retirement, resignation, expulsion,
Bankruptcy or dissolution of a Member shall not, in and of itself, dissolve the
Company. The successors in interest to the bankrupt Member shall, for the
purpose of settling the estate, have all of the rights of such Member, including
the same rights and subject to the same limitations that such Member would have
had under the provisions of this Agreement to Transfer its Membership Interest.
A successor in interest to a Member shall not become a substituted Member except
as provided in this Agreement. Notwithstanding the foregoing, any purchaser of
Buyer's or Holdings' Membership Interest in accordance with the exercise by MHSI
or the Company of the terms of the Buyer Security Agreement and the applicable
provisions of the UCC and any purchaser of MHSI's Membership Interest in
accordance with the exercise by Buyer or the Company of the terms of the Seller
Security Agreement shall, upon execution of a counterpart to this Agreement
become a Member with respect to the transferred Membership Interest.

        Section 3.10.   Exercise Under the Security Agreements. The Members
acknowledge that Buyer has granted a security interest in its Membership
Interest pursuant to the Buyer Security Agreement. Upon the election by either
of the Secured Parties (as defined in the Buyer Security Agreement) to hold the
Collateral in accordance with Section 3(f) of the Buyer Security Agreement,
notwithstanding Article X of this Agreement, MHSI will thereupon be
automatically admitted to the Company as a Member with respect to Buyer's
Membership Interest hereunder, and concurrently, Buyer will cease to be a
Member. In such event, or if Buyer's Membership Interest is sold to a purchaser
in accordance with the exercise by the Secured Parties of their rights under the
Buyer Security Agreement, all of Buyer's obligations to make Fixed and Variable
Deferred Payments under the Purchase Agreement, payments under the Base Note and
Monthly Capital Contributions under this Agreement (and Buyer Parents'
obligations under the Buyer Parent Guarantee) will cease (except for those
obligations and liabilities accrued through such date or relating to any taxable
year or portion thereof prior to such date), and MHSI shall have all of the
rights of Buyer as a member hereunder. The Members further acknowledge that MHSI
has granted a security interest in its Membership Interest pursuant to the
Seller Security Agreement. Upon election by either of the Secured Parties (as
defined in the Seller Security Agreement) to hold the Collateral in accordance
with Section 3(f) of the Seller Security Agreement, notwithstanding Article X of
this Agreement, Buyer will automatically succeed to all or the applicable
portion of MHSI's Membership Interest hereunder.

                                       15

<PAGE>

                                   ARTICLE IV
                     CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

        Section 4.1.    Capital Contributions.

                (a)     The Members acknowledge and agree that the Capital
Account balances of each Member are estimated as of the Closing Date to be as
reflected on Exhibit A hereto.

                (b)     Subject to Sections 4.1(d), (f) and (g) hereof, the
Members acknowledge and agree that the continuing operation of the Facility will
require regular Monthly Capital Contributions. Capital Contributions will be
made monthly in arrears. The Administrative Member shall submit to each Member,
no later than the tenth day after the end of each month, a written schedule in
the form attached as Exhibit E hereto (the "Capital Contribution Schedule")
setting forth the Monthly Capital Contributions for each Member equal to their
pro rata shares (based on the applicable Sharing Ratios during the relevant
calculation period) of the amount required to pay down to zero the aggregate
outstanding balances of the Working Capital Loans.

                (c)     Subject to Sections 4.1(d), (f) and (g) hereof, on or
before the Monthly Payment Date, each Member shall contribute to the capital of
the Company an amount in immediately available funds equal to such Member's
Monthly Capital Contribution as set forth in the Capital Contribution Schedule
pursuant to Section 4.1(b) hereof.

                (d)     Notwithstanding any other provision in this Agreement to
the contrary, in no event will the amount of the Monthly Capital Contribution
required to be made hereunder by Buyer for any month be greater than the excess
of the Applicable Percentage of the Estimated Tax Credits with respect to such
month over the aggregate of the payments under the Base Notes and the Fixed
Deferred Payments accrued with respect to such month. For any month for which
Buyer's Monthly Capital Contributions is limited by this Section 4.1(d), the
Monthly Capital Contributions of the other Members for such month shall be
reduced so that all Members make Capital Contributions in the same ratio as the
Sharing Ratios and, in such event, MHSI's obligation to make Working Capital
Loans shall increase with respect to such month to the extent of the amount of
any such reduction in the Members' Monthly Capital Contributions with respect to
such month.

                (e)     If Buyer reasonably disputes the Administrative Member's
calculations set forth in the Capital Contribution Schedule, Buyer shall so
notify the Administrative Member on or before the Monthly Payment Date, and, in
such event, Buyer and the Administrative Member shall consider the issues raised
or in dispute and discuss such issues with each other and attempt to reach a
mutually satisfactory agreement. Buyer shall pay, on or before the Monthly
Payment Date, any undisputed portion of the amount then due, and any amount in
dispute may be withheld pending resolution of the dispute; it being understood
that such sums as are withheld by Buyer in accordance with this Section 4.1(e)
shall not give rise to any of the Company's rights under Section 4.4(a) or (c)
hereof or the Security Agreement unless (i) such dispute is resolved in the
Administrative Member's favor and (ii) Buyer fails to pay such disputed amount
(together with interest at the Commercial Paper Rate) within the time period
specified below. If the dispute is not resolved within ten Business Days of such
notification, Buyer and the Administrative Member shall each present their
interpretations to the Accounting Firm, and shall

                                       16

<PAGE>

instruct the Accounting Firm to calculate the correct amounts to be reflected on
the Capital Contribution Schedule and to resolve the dispute promptly, but in no
event more than 30 calendar days after having the dispute submitted to it. The
Accounting Firm will make a determination as to each of the items in dispute,
which must be (i) in writing, (ii) furnished to each of Administrative Member
and Buyer and (iii) made in accordance with this Agreement, and which
determination, absent manifest error, will be conclusive and binding on
Administrative Member and Buyer and, to the fullest extent permitted by law, may
be enforced in the courts specified in Section 12.12 hereof. In the event the
Accounting Firm determines that any of the calculations in dispute in the
Capital Contribution Schedule was incorrect, the fees and expenses of the
Accounting Firm shall be borne by the Company, and in all other cases the fees
and expenses of the Accounting Firm shall be borne by Buyer. Each of the
Administrative Member and Buyer shall use reasonable efforts to cause the
Accounting Firm to render its decision as soon as reasonably practicable,
including by promptly complying with all reasonable requests by the Accounting
Firm for information, books, records and similar items. Upon receipt by Buyer of
the Accounting Firm's written determination of the resolution of any such
dispute in Administrative Member's favor, Buyer shall pay all or any portion of
the amounts in dispute in accordance with such resolution plus interest at the
Commercial Paper Rate on the amounts in dispute from the date such amounts were
due until the date of payment thereof, such payment date being in any event no
later than ten Business Days from the receipt of such written determination.
Upon the resolution of any such dispute in Buyer's favor, the amount in dispute
shall not be considered due and owing and the Company and the Administrative
Member shall have no rights whatsoever with respect to such amount under Section
4.4(a) or (c) hereof or the Buyer Security Agreement.

                (f)     In no event will Buyer be responsible for funding any
Capital Contributions to cover costs that are allocated solely to MHSI under
Section 5.1(c). To the extent required after the Closing Date, MHSI shall make
any Capital Contributions necessary to be made after the Closing Date to cover
such costs.

                (g)     Except as provided in this Section 4.1 and Section
4.4(b), no other Capital Contributions or Monthly Capital Contributions shall be
required or permitted from the Members unless all of the Members consent thereto
in writing.

                (h)     For any given Quarter, in the event that during the
immediately preceding Quarter the Company failed to sell at least 175,000 Tons
of synthetic fuel (for any reason, including without limitation, a force majeure
event) and the Manager has not provided assurances reasonably satisfactory to
Buyer that the Company is capable of selling in excess of 175,000 Tons of
synthetic fuel during such given Quarter, Buyer may give the Administrative
Member notice of its election to waive financial participation in the Company
for such Quarter. As to any Quarter for which Buyer makes such election, Buyer
will have no obligation to make any Capital Contributions for such Quarter or a
Variable Deferred Payment (as defined in the Purchase Agreement) for such
Quarter, and Buyer's allocable share of all distributions and allocations of
items of Company income, gain, credits (including Tax Credits), deductions and
losses for such Quarter will be allocated to MHSI, and MHSI will make Capital
Contributions equal to 100 percent of the amount required to pay down to zero
the aggregate outstanding balances, if any, of the Working Capital Loans for
such Quarter.

                                       17

<PAGE>

        Section 4.2.    Written Requests. Each Capital Contribution Schedule
issued pursuant to Section 4.1 shall have attached the most recent Operations
Report and contain the following information:

                (a)     The aggregate outstanding balance of Working Capital
Loans;

                (b)     The total amount of Monthly Capital Contributions
requested from all Members;

                (c)     The amount of the Monthly Capital Contribution requested
from the Member to whom the request is addressed, in accordance with Section
4.1;

                (d)     Good faith estimates of the previous month's sales,
production and Tax Credits resulting from sales; and

                (e)     A calculation of the limitation described in
Section 4.1(d).

        Section 4.3.    Capital Accounts.

                (a)     There shall be established and maintained throughout the
full term of the Company in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv) for each Member, a capital account (a "Capital Account") which
shall be credited with (i) such Member's Capital Contributions, (ii) allocations
of book income and gain to such Member pursuant to Article V and (iii) the
amount of any Company liabilities assumed by such Member or which are secured by
any property distributed by the Company to such Member. Each Member's Capital
Account shall be debited with (i) the amount of cash and the Gross Asset Value
of other property distributed to such Member, (ii) allocations of book
deductions and losses to such Member pursuant to Article V and (iii) the amount
of any liabilities of such Member assumed by the Company or which are secured by
any property contributed by such Member to the Company. Within 60 days after the
Closing Date, the parties will complete Exhibit A, which shall set forth the
initial balance of each Member in its Capital Account.

                (b)     If all or a portion of a Membership Interest in the
Company is Transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the Membership Interest so Transferred.

                (c)     The provisions of this Agreement relating to maintenance
of Capital Accounts are intended to comply with Treasury Regulation Section
1.704-1(b), and shall be interpreted and applied in a manner consistent with
such Treasury Regulation.

        Section 4.4.    Defaulted Capital Contributions.

                (a)     Subject to Section 4.1(d) hereof, if a Member shall fail
to pay its required portion of any Monthly Capital Contributions when due (a
"Defaulting Member") and such failure to pay continues for 20 days after receipt
of written notice of such failure from the Administrative Member or another
Member (the "Non-Defaulting Members"), such failure to pay shall constitute an
event of default (an "Event of Default"). For so long as the Defaulting Member
shall have failed to pay its portion of the Monthly Capital Contributions as and
when

                                       18

<PAGE>

required pursuant to Section 4.1 hereof, the Defaulting Member's right to vote
on matters put before the Members shall be suspended. In addition and without
limiting the rights and remedies available to the Company at law or in equity,
the Non-Defaulting Members shall have the right, upon the occurrence and during
the continuation of an Event of Default, on behalf of the Company to exercise
one or more of the following remedies unless such Non-Defaulting Members shall
have paid the defaulted Monthly Capital Contribution pursuant hereto:

                        (i)     for so long as the Defaulting Member shall have
failed to pay its portion of the Monthly Capital Contributions as and when
required under this Article IV, to cause the Company to withhold any
distributions otherwise payable to such Defaulting Member and to use such
amounts to offset the amounts due in respect of the defaulted Monthly Capital
Contribution obligation; and

                        (ii)    to sue for the amount due (taking into account
amounts received under clause (i) above), in which case the Company shall be
entitled to collect reasonable attorneys' fees and all other costs of
collection, plus interest on any unpaid Monthly Capital Contributions (taking
into account amounts received under clause (i) above) at a rate (the "Default
Rate") equal to the lesser of the Prime Rate plus two percent per annum
compounded monthly, or the maximum rate of interest allowed by applicable law,
from the date on which the Monthly Capital Contribution was first due until such
unpaid amount is paid to the Company.

For all purposes hereof, distributions applied pursuant to Section 4.4(a)(i)
shall be deemed to have been distributed to the Defaulting Member and then paid
by the Defaulting Member to the Company.

                (b)     Upon the occurrence and during the continuation of an
Event of Default by a Defaulting Member in making Monthly Capital Contributions,
the Non-Defaulting Members may make Monthly Capital Contributions to the Company
in the amount of the defaulted Monthly Capital Contributions and thereupon all
distributions and allocations of items of Company income, gain, credits,
deductions and losses allocable to the Defaulting Member for the period as to
which the defaulted Capital Contribution relates will be made to the
Non-Defaulting Members.

                (c)     In addition to the remedies in Section 4.4(a) and (b),
where the Defaulting Member is Buyer or where Buyer or Buyer Parent fails to pay
any portion of the purchase price for Buyer's Membership Interest that is due
and payable under the Purchase Agreement, so long as the Secured Parties have
not elected to hold the Collateral in accordance with Section 3(f) of the Buyer
Security Agreement, MHSI shall have the option, on behalf of the Company,
exercisable by delivery of written notice thereof to Defaulting Member within
180 days following Buyer's receipt of the written notice of default, so long as
such default is continuing at such time, to cause the Membership Interest of the
Defaulting Member to be redeemed by the Company. If MHSI exercises such option
(i) Buyer shall reconvey and transfer to the Company all right, title and
interest in and to the Membership Interest, free and clear of all Encumbrances
other than the obligations and liabilities under Transaction Agreements with
respect thereto; (ii) Buyer shall be deemed to have made the written
representations set forth on Exhibit D attached hereto to the Company; (iii)
Buyer shall take all such further actions and execute, acknowledge and deliver
all such further documents that are necessary or useful to effectuate the
transfer of

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<PAGE>

the Membership Interest contemplated by this Section 4.4(c); (iv) the Company
shall effectuate such redemption; (v) all obligations and liabilities associated
with the Membership Interest will terminate except those obligations and
liabilities accrued through the date of termination; (vi) Buyer will have no
further rights as a member of the Company; (vii) this Agreement shall be amended
to reflect Buyer's resignation as a member of the Company; and (viii) Buyer
shall have no further obligation thereafter to make any contributions to the
capital of the Company or any further payments of the Purchase Price under the
Purchase Agreement, except those obligations and liabilities accrued through the
date of termination. Relief from the obligation of Buyer to make such payments
will be deemed sufficient consideration for the reconveyance and transfer of the
Membership Interest to the Company.

                (d)     If the Membership Interest held by Buyer is redeemed or
transferred to MHSI pursuant to Section 6.1 of the Purchase Agreement, or the
action with respect to "the Collateral" referred to in Section 3.10 hereof is
taken, then Buyer shall have no further obligation to make any Capital
Contributions to the Company, except for those obligations and liabilities
accrued through the date of such redemption.

        Section 4.5.    Working Capital Loans. During each month during the term
hereof, to the extent that working capital on-hand and Monthly Capital
Contributions made by the Members are not sufficient to cover the operating
costs and working capital needs of the Company, MHSI will advance to the
Company, when and as needed, funds sufficient to cover the operating costs and
working capital needs of the Company but not in excess of $12,500,000
outstanding at any time ("Working Capital Loans"). Working Capital Loans will
not bear interest and will be repaid on an ongoing basis out of Monthly Capital
Contributions, available cash flow and sale or refinancing proceeds, as
reasonably determined by the Administrative Member from time to time, and any
remaining amounts owing shall become finally due and payable at the earlier of
March 1, 2008, or the dissolution of the Company.

        Section 4.6.    No Third Party Beneficiary. To the full extent permitted
by law, no creditor or other third party having dealings with the Company shall
have the right to enforce the right or obligation of any Member to make Capital
Contributions or loans or to pursue any other right or remedy hereunder or at
law or in equity, it being understood and agreed that the provisions of this
Agreement shall be solely for the benefit of, and may be enforced solely by, the
parties hereto and their respective successors and permitted assigns. None of
the rights or obligations of the Members herein set forth to make Capital
Contributions or loans to the Company shall be deemed an asset of the Company
for any purpose by any creditor (other than MHSI) or other third party, nor may
such rights or obligations be sold, transferred or assigned by the Company or
pledged or encumbered by the Company to secure any debt or other obligation of
the Company or of any of the Members. In addition, it is the intent of the
parties hereto that no distribution to any Member shall be deemed a return of
money or other property in violation of the Act. The payment of such money or
distribution of such property shall be deemed to be a compromise within the
meaning of the Act and, to the full extent permitted by law, any Member
receiving the payment of any such money or distribution of any such property
shall not be required to return any such money or property to any Person, the
Company or any creditor of the Company. However, if any court of competent
jurisdiction holds that, notwithstanding the provisions of this Agreement, any
Member is obligated to return such money or property, such obligation shall be
the obligation of such Member and not of the other Members. Without

                                       20

<PAGE>

limiting the generality of the foregoing, a deficit Capital Account of a Member
shall not be deemed to be a liability of such Member nor an asset or property of
the Company.

        Section 4.7.    No Deficit Capital Account Restoration. No Member shall
have any obligation to restore any negative balance in its Capital Account upon
the occurrence of the reconveyance of Buyer's Membership Interest pursuant to
Section 4.4(c) hereof and/or the Purchase Agreement or upon dissolution,
winding-up or termination of the Company.

                                    ARTICLE V
                                   ALLOCATIONS

        Section 5.1.    Allocations.

                (a)     Except as set forth in Sections 5.1(b) and 5.1(c), for
purposes of maintaining capital accounts, after giving effect to the special
allocations set forth in Section 5.2, for each Fiscal Year or shorter period:
(i) all items of Company income (including, without limitation, gross income and
receipts from the sale of synthetic fuel) shall be allocated among the Members
in accordance with their Sharing Ratios; (ii) all items of Company deduction or
expense shall be allocated among the Members in accordance with their Sharing
Ratios; and (iii) all Depreciation and items of gain or loss from sales of
assets of the Company (other than synthetic fuel) shall be allocated among the
Members in accordance with their Capital Interests; provided, however, that
items of Company deduction or loss shall not be allocated to a Member to the
extent that such allocation would cause a deficit in such Member's Capital
Account (after reduction to reflect the items described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the amount such Member
is obligated to contribute to the capital of the Company. Any deduction or loss
in excess of that limitation shall be allocated to the other Members provided
that any such deduction or loss shall, to the extent permissible, reduce
subsequent allocations of deductions or losses to those Members and increase
deductions or losses to the Member for whom deductions or losses were limited.

                (b)     To the extent any Capital Contribution is made by a
Non-Defaulting Members pursuant to Section 4.4(b), all items of Company income,
gain, credits, deductions and losses otherwise allocable to the Defaulting
Member for the period to which such Capital Contribution relates will be
allocated to such Non-Defaulting Members.

                (c)     All items of income, gain, credit, deduction and loss
relating to the production or sale of synthetic fuel sold in Excluded Sales or
to current receivables or current liabilities existing as of the Closing Date
shall be allocated to MHSI; provided, however, that prepaid amounts, binder and
other raw materials and operating or production supplies existing as of the
Closing Date (the "Pre-Sale Items") shall not be covered by the preceding clause
but shall be treated as operating or production costs after the Closing Date and
borne by all Members. Sales of such synthetic fuel after the Closing Date will
be considered made out of Pre-Sale Inventory until such inventory has been
exhausted.

        Section 5.2.    Special Allocations. Any allocation pursuant to Section
5.1 will be subject to any adjustment required to comply with Treasury
Regulation Section 1.704-1(b), including any qualified income offset within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)

                                       21

<PAGE>

and any minimum gain chargeback or partner nonrecourse debt minimum gain
chargeback within the meaning of Treasury Regulation Section 1.704-2. Any
nonrecourse deductions shall be allocated to the Members in proportion to their
respective Capital Interests, and any partner nonrecourse deductions (within the
meaning of Treasury Regulation Section 1.704-2(i)) shall be allocated to the
Member that bears the economic risk of loss with respect to the debt to which
such deductions are allocable. For the avoidance of doubt, partner nonrecourse
deductions shall not exist to the extent the Members are obligated to make
Capital Contributions to the Company. Any special allocations of items pursuant
to this Section 5.2 shall be taken into account, to the extent permitted by the
Treasury Regulations, in computing subsequent allocations of income, gain,
deductions or losses pursuant to Section 5.1 so that the net amount of any items
so allocated and all other items allocated to each Member shall, to the extent
possible, be equal to the amount that would have been allocated to each Member
pursuant to Section 5.1 had such special allocations under this Section 5.2 not
occurred.

        Section 5.3.    Tax Allocations. (a) All allocations of tax items of
Company income (including, without limitation, gross income and receipts from
the sale of synthetic fuel), gain, deductions and losses for each Fiscal Year
shall be allocated in the same proportions as the allocations of book items of
Company income (including, without limitation, gross income and receipts from
the sale of synthetic fuel), gain, deductions and losses were made for such
Fiscal Year pursuant to Sections 5.1 and 5.2 hereof. Tax Credits shall be
allocated to the Members the same ratio as receipts from the sale of synthetic
fuel are shared as provided in Treasury Regulations Section 1.704-1(b)(4)(ii).

                (b)     Notwithstanding Section 5.3(a), if, as a result of
contributions of property by a Member to the Company or an adjustment to the
Gross Asset Value of Company assets pursuant to this Agreement, there exists a
variation between the adjusted basis of an item of Company property for federal
income tax purposes and as determined under the definition of Gross Asset Value,
allocations of income, gain, loss, and deduction shall, solely for tax purposes,
be allocated among the Members so as to take into account any variation between
the adjusted basis of such property to the Company for federal income tax
purposes and its initial Gross Asset Value (computed in accordance with the
definition of Gross Asset Value) using the traditional method pursuant to
Treasury Regulations Section 1.704-3.

                (c)     Allocations pursuant to this Section 5.3 are solely for
purposes of federal, state and local taxes and shall not affect, or in any way
be taken into account in computing, any Member's Capital Account or share of
income, gain, deductions or losses or distributions pursuant to any provision of
this Agreement.

                (d)     To the extent that an adjustment to the adjusted tax
basis of any Company asset is made pursuant to section 743(b) of the Code as the
result of a purchase of an interest in the Company any adjustment to the
depreciation, amortization, gain or loss resulting from such adjustment shall
affect the transferee only and shall not affect the Capital Account of the
transferor or transferee. In such case, the transferee agrees to provide to the
Company (i) the allocation of any step-up or step-down in basis to the Company's
assets and (ii) the depreciation or amortization method for any step-up in basis
to the Company's assets.

                                       22

<PAGE>

        Section 5.4.    Transfer or Change in Company Interest. If the
respective Membership Interests or Sharing Ratios of the existing Members in the
Company change or if a Membership Interest is Transferred in compliance with
this Agreement to any other Person (including the Transfer by Holdings to Buyer
at Closing), then, for the Fiscal Year in which the change or Transfer occurs,
all income, gains, losses, deductions, Tax Credits and other tax incidents
resulting from the operations of the Company shall be allocated, as between the
Members for the Fiscal Year in which the change occurs or between the transferor
and transferee, by taking into account their varying interests using the closing
of the books method in accordance with Section 706 of the Code, unless otherwise
agreed by all the Members.

                                   ARTICLE VI
                                  DISTRIBUTIONS

        Section 6.1.    Distributions. (a) Except as provided in Sections
4.4(a)(i), 4.4(b), 4.4(c), 6.1(b) and 11.2, distributions to the Members shall
be made pro rata to the Members according to the Sharing Ratios. Distributions,
if any, may be made from time to time in such amounts and at such times as the
Administrative Member shall propose, as consented to by the Members in
accordance with Section 8.3(a). There shall be no distributions of the assets of
the Company in kind without the prior written consent of all of the Members.

                (b)     Notwithstanding Section 6.1(a), all Company revenues
resulting from Excluded Sales and receipt of accounts receivable accrued as of
the Closing Date net of (i) all accounts payable and expenses accrued on or
before the Closing Date (other than amounts treated as post-Closing operating or
production costs pursuant to the proviso in Section 5.1(c)) and (ii) any costs
(including any applicable Taxes) with respect to the sale of any Pre-Sale
Inventory, shall be distributed to MHSI.

        Section 6.2.    Withdrawal of Capital. No Member shall have the right to
withdraw capital from the Company or to receive or demand distributions or
return of its Capital Contributions until the Company is dissolved in accordance
with this Agreement and applicable provisions of the Act. No Member shall be
entitled to demand or receive any interest on its Capital Contributions.

        Section 6.3.    Withholding Taxes. If the Company is required to
withhold taxes with respect to any allocation or distribution to any Member
pursuant to any applicable federal, state, local or foreign tax laws, the
Company may, after first notifying the Member and permitting the Member, if
legally permitted, to contest the applicability of such taxes, withhold such
amounts and make such payments to taxing authorities as are necessary to ensure
compliance with such tax laws. Any funds withheld by reason of this Section 6.3
shall nonetheless be deemed distributed to the Member in question for all
purposes under this Agreement. If the Company did not withhold from actual
distributions any amounts it was required to withhold, the Company may, at its
option, (i) require the Member to which the withholding was credited to
reimburse the Company for such withholding; or (ii) reduce any subsequent
distributions by the amount of such withholding. This obligation of a Member to
reimburse the Company for taxes that were required to be withheld shall continue
after such Member transfers or liquidates its Membership Interest in the
Company. Each Member agrees to furnish the Company with any representations

                                       23

<PAGE>

and forms as shall reasonably be requested by the Company to assist it in
determining the extent of, and in fulfilling, any withholding obligations it may
have.

        Section 6.4.    Limitation upon Distributions. The provisions of this
Agreement, including the foregoing provisions of this Article VI to the contrary
notwithstanding, no distribution shall be made: (a) if such distribution would
violate any contract or agreement to which the Company is then a party
(including without limitation the Project Documents) or any Legal Requirement
then applicable to the Company, (b) to the extent that the Administrative Member
determines (and the Members consent thereto in accordance with Section 8.3(a))
that any amount otherwise distributable should be retained by the Company to
pay, or to establish a reserve for the payment of, any liability or obligation
of the Company, whether liquidated, fixed, contingent or otherwise, or to hedge
an existing investment, or (c) to the extent that the Administrative Member
determines (and the Members consent thereto in accordance with Section 8.3(a))
that the cash available to the Company is insufficient to permit such
distribution.

                                   ARTICLE VII
                             ACCOUNTING AND RECORDS

        Section 7.1.    Fiscal Year. The fiscal year of the Company (the "Fiscal
Year") shall be the same as the taxable year of the Company. The taxable year of
the Company will be a year that ends on November 30, or such other year as may
be required by applicable federal income tax law.

        Section 7.2.    Books and Records and Inspection.

                (a)     The Administrative Member shall keep, or cause to be
kept by the Company, full and accurate books of account, financial records and
supporting documents, which shall reflect, completely, accurately and in
reasonable detail, each transaction of the Company and such other matters as are
usually entered into the records or maintained by Persons engaged in a business
of like character or as are required by law, and all other documents and
writings of the Company. The books of account, financial records, and supporting
documents and the other documents and writings of the Company shall be kept and
maintained at the principal office of the Company. The financial records and
reports of the Company shall be kept in accordance with GAAP and kept on an
accrual basis.

                (b)     In addition to and without limiting the generality of
Section 7.2(a), the Administrative Member shall keep, or cause to be kept by the
Company, at its principal office:

                        (i)     true and full information regarding the status
of the business financial condition of the Company, including any financial
statements for the three most recent years;

                        (ii)    promptly after becoming available, a copy of the
Company's federal, state, and local income tax returns for each year;

                        (iii)   a current list of the name and last known
business, residence or mailing address of each Member and the Manager;

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<PAGE>

                        (iv)    a copy of this Agreement and the Company's
Certificate of Formation, and all amendments thereto, together with executed
copies of any written powers of attorney pursuant to which this Agreement and
such Certificate of Formation and all amendments thereto have been executed;

                        (v)     true and full information regarding the amount
of cash and a description and statement of the agreed value of any other
property and services contributed by each Member and which each Member has
agreed to contribute in the future, and the date upon which each became a
Member; and

                        (vi)    copies of records that would enable a Member to
determine the Member's relative shares of the Company's distributions and the
Member's relative voting rights.

                        (vii)   all records related to the production and sale
of coal-based synthetic fuel and the qualification of such fuel for Tax Credits
pursuant to Section 29 of the Code, applicable Treasury Regulations, Revenue
Procedures and any other pronouncements by the IRS, whether currently existing
or promulgated in the future.

                (c)     All books and records of the Company shall be open to
inspection and copying by any of the Members or their Representatives during
business hours and at such Member's expense, for any purpose reasonably related
to such Member's interest in the Company.

        Section 7.3.    Bank Accounts, Notes and Drafts.

                (a)     All funds not required for the immediate needs of the
Company shall be placed in Permitted Investments, which investments shall have a
maturity appropriate for the anticipated cash flows needs of the Company. All
Company funds shall be deposited and held in accounts which are separate from
all other accounts maintained by the Administrative Member and the Members, and
the Company's funds shall not be commingled with any other funds of any other
Person, including, without limitation, any Manager, any Member or any Affiliate
(other than the Company itself) of a Manager or a Member.

                (b)     The Members acknowledge that the Administrative Member
may maintain Company funds in accounts, money market funds, certificates of
deposit, other liquid assets in excess of the insurance provided by the Federal
Deposit Insurance Corporation, or other depository insurance institutions and
that the Administrative Member shall not be accountable or liable for any loss
of such funds resulting from failure or insolvency of the depository
institution.

                (c)     Checks, notes, drafts and other orders for the payment
of money shall be signed by such persons as the Administrative Member from time
to time may authorize. When the Administrative Member so authorizes, the
signature of any such person may be a facsimile.

        Section 7.4.    Financial Statements.

                (a)     As soon as possible after the Closing Date, MHSI and
Buyer shall meet to determine the procedures to be used by the Accounting Firm
in order to issue an agreed upon

                                       25

<PAGE>

procedures letter in accordance with Section 7.4(c) hereof, and MHSI shall
promptly communicate such procedures to the Accounting Firm.

                (b)     As soon as practical after the end of each Quarter, but
in no event more than 30 days after the end of any such Quarter, the
Administrative Member shall furnish to each Member (i) unaudited tax-basis
financial statements with respect to such Quarter of the Company, consisting of
(A) a balance sheet showing the Company's financial position as of the end of
such Quarter, (B) profit and loss statements for such Quarter, (C) a statement
of cash flows for such Quarter, certified by a responsible officer of the
Administrative Member as true complete and correct in all material respects and
(ii) a summary of the number of Tons and the BTU content of the synthetic fuel
produced and sold by the Company to unrelated persons during such Quarter.

                (c)     Within 90 days after the end of each Fiscal Year, the
Administrative Member shall furnish to each Member (i) tax-basis financial
statements with respect to such Fiscal Year that are audited and certified by
the Accounting Firm, (ii) a statement of each Member's closing Capital Account
balance as of the end of such Fiscal Year, (iii) a statement of the number of
Tons and the BTU content of the synthetic fuel produced and sold by the Company
to unrelated Persons during each Quarter during the Fiscal Year as well as a
procedures letter from the Accounting Firm stating that the determination was
made in accordance with agreed upon practices and procedures. The audited
financial statements must include (A) a balance sheet showing the Company's
financial position as of the end of such Fiscal Year, (B) profit and loss
statements for such Fiscal Year and (C) a statement of cash flows for such
Fiscal Year.

        Section 7.5.    Partnership Status and Tax Elections.

                (a)     It is the intent of the Members that the Company be
taxed as a partnership for United States federal, state and local income tax
purposes. The Members hereby agree not to elect to be excluded from the
application of Subchapter K of Chapter 1 of Subtitle A of the Code or any
similar state statute and agree not to elect for the Company to be treated as a
corporation, or an association taxable as a corporation, under the Code or any
similar state statute.

                (b)     The Company shall make the following elections and take
the following positions under United States income tax laws and regulations and
any similar state statutes:

                        (i)     Adopt the Fiscal Year as the annual accounting
period; and

                        (ii)    Adopt the accrual method of accounting.

                (c)     The Company shall file an election under Section 754 of
the Code and the Treasury Regulations thereunder to adjust the basis of the
Company assets under Section 734(b) of the Code or Section 743(b) of the Code
and any corresponding elections under the applicable sections of state and local
law.

                (d)     The Company shall file an election under Section
6231(a)(1)(B)(ii) of the Code and the Treasury Regulations thereunder to treat
the Company as a partnership to which the provisions of Sections 6221 through
6234 of the Code, inclusive, apply.

                                       26

<PAGE>

        Section 7.6.    Company Tax Returns. The United States federal income
Tax Returns for the Company and all other Tax Returns of the Company shall be
prepared in a manner consistent with the Private Letter Ruling and as directed
by the Administrative Member in Consultation with the other Members. The
Administrative Member, in Consultation with the other Members, may extend the
time for filing any such Tax Returns as provided for under applicable statutes.
At the Company's expense, the Administrative Member shall cause the Company to
retain the Accounting Firm to prepare or review the necessary federal and state
income Tax Returns and information returns for the Company. Each Member shall
provide such information, if any, as may be reasonably needed by the Company for
purposes of preparing such Tax Returns, provided that such information is
readily available from regularly maintained accounting records. At least 30 days
prior to filing the federal and state income Tax Returns and information
returns, the Administrative Member shall deliver to the other Members for their
review a copy of the Company's federal and state income Tax Returns and
information returns in the form proposed to be filed for each Fiscal Year, and
shall incorporate all reasonable changes or comments to such proposed Tax
Returns and information returns requested by the other Members at least ten days
prior to the filing date for such returns. After taking into account any such
requested changes, the Administrative Member shall cause the Company to timely
file, taking into account any applicable extensions, such Tax Returns. Within 20
days after filing such federal and state income Tax Returns and information
returns, the Administrative Member shall cause the Company to deliver to each
Member a copy of the Company's federal and state income Tax Returns and
information returns as filed for each Fiscal Year, together with any additional
tax-related information in the possession of the Company that such Member may
reasonably and timely request in order to properly prepare its own income Tax
Returns.

        Section 7.7.    Tax Audits.

                (a)     MHSI is hereby designated as the "tax matters partner,"
as that term is defined in Section 6231(a)(7) of the Code (the "Tax Matters
Partner"), of the Company, with all of the rights, duties and powers provided
for in Sections 6221 through 6234 of the Code, inclusive. MHSI is hereby
directed and authorized to take whatever steps MHSI, in its reasonable
discretion, deems necessary or desirable to perfect such designation, including,
without limitation, filing any forms or documents with the IRS and taking such
other action as may from time to time be required under the Treasury
Regulations. If MHSI transfers some or all of its Membership Interest (other
than to an Affiliate), MHSI shall be removed as the Tax Matters Partner and the
then-current members of the Company shall select a replacement Tax Matters
Partner for the Company effective as of the date of the transfer of MHSI's
Membership Interest (other than to an Affiliate).

                (b)     The Tax Matters Partner, in Consultation with the other
Members, shall direct the defense of any claims made by the IRS to the extent
that such claims relate to the adjustment of Company items at the Company level
and, in connection therewith, shall cause the Company to retain and to pay the
fees and expenses of counsel and other advisors chosen by the Tax Matters
Partner in Consultation with the other Members. The Tax Matters Partner shall
promptly deliver to each other Member a copy of all notices, communications,
reports and writings received from the IRS relating to or potentially resulting
in an adjustment of Company items, shall promptly advise each of the other
Members of the substance of any conversations with the IRS in connection
therewith and shall keep the other Members advised of all

                                       27

<PAGE>

developments with respect to any proposed adjustments which come to its
attention. In addition, the Tax Matters Partner shall (i) provide the other
Members with a draft copy of any correspondence or filing to be submitted by the
Company in connection with any administrative or judicial proceedings relating
to the determination of Company items at the Company level reasonably in advance
of such submission, (ii) incorporate all reasonable changes or comments to such
correspondence or filing requested by the other Members and (iii) provide the
other Members with a final copy of correspondence or filing. The Tax Matters
Partner will provide each Member with notice reasonably in advance of any
meetings or conferences with respect to any administrative or judicial
proceedings relating to the determination of Company items at the Company level
(including any meetings or conferences with counsel or advisors to the Company
with respect to such proceedings) and each Member shall have the right to
participate, at its sole cost and expense, in any such meetings or conferences.

                (c)     Notwithstanding Section 7.7(b), the Tax Matters Partner
shall not (i) enter into any settlement agreement that is binding upon the other
Member with respect to the determination of Company items at the Company level
or (ii) file a petition under Section 6226(a) of the Code for the readjustment
of Company items without the prior consent of the other Member, such consent not
to be unreasonably withheld.

                (d)     If for any reason the IRS disregards the election made
by the Company pursuant to Section 7.5(d) and commences any audit or proceeding
in which it makes a claim, or proposes to make a claim, against any Member that
could reasonably be expected to result in the disallowance or adjustment of any
items of income, gain, loss, deduction or credit (including Tax Credits)
allocated to such Member by the Company, then such Member shall promptly advise
the other Members of the same, and such Member, in Consultation with the other
Members, shall use commercially reasonable efforts to convert the portion of
such audit or proceeding that relates to such items into a Company level
proceeding consistent with the Company's election pursuant to Section 7.5(d).

                                  ARTICLE VIII
                                   MANAGEMENT

        Section 8.1.    Management. The Manager shall have the authorities,
powers and responsibilities set forth in the O&M Agreement (and as provided
herein). The Company hereby ratifies and approves the O&M Agreement. Except as
delegated to the Administrative Member or the Manager hereunder, or as provided
in the O&M Agreement or as reserved to the Members or as otherwise provided in
this Agreement, the powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed under
the direction of, the Board of Managers, who shall take all actions for and on
behalf of the Company not otherwise provided for in this Agreement. In addition,
the Members may vest in the Board of Managers the authority to take such actions
for and on behalf of the Company not otherwise provided for in this Agreement or
reserved to the Members, to the extent such actions are not inconsistent with
the terms of this Agreement.

        Section 8.2.    Administrative Member. The Members shall appoint, and
from time to time may remove and replace, a Member to be the Administrative
Member. The duties of the Administrative Member shall be (a) to manage the cash
and bank accounts of the Company, (b)

                                       28

<PAGE>

to receive and pass on to the other Members notices, reports and other
communications from the Manager, (c) to liaise with the Owners Representative
under the O&M Agreement (including setting monthly production levels, so long as
such levels, on a quarterly basis, are within the Quarterly Maximum Production
and Quarterly Minimum Production levels), (d) to negotiate contracts for the
purchase of coal and sale of synfuel within parameters set by the Members from
time to time, (e) to carry out the administrative duties of the Administrative
Member set forth in this Agreement, (f) to execute contracts, agreements and
other documents on behalf of the Company, and (g) such other duties as the
Members shall require from time to time; provided that the exercise of the
foregoing duties shall in all instances be subject to the provisions of Section
8.3. The initial Administrative Member is MHSI.

        Section 8.3.    Members.

                (a)     In addition to any other approval required by applicable
law or this Agreement, the following matters are reserved to the Members, and
neither the Company, the Manager nor any Officer shall do or take any of the
following actions without the consent of Members holding at least 60% of the
Membership Interests as provided in the final paragraph of this Section 8.3(a).

                        (i)     Any sale, lease or disposition of the Facility;

                        (ii)    Any merger or consolidation of the Company with
another Person, or sale, lease or other disposition of all or substantially all
of the assets of the Company;

                        (iii)   Causing the Company to incur in any single
transaction or in any series of related transactions indebtedness for borrowed
money in excess of $2 million;

                        (iv)    Any issuance, sale or buy-back of equity
interests by the Company, unless a Member or the Company is otherwise entitled
to take any such action on behalf of the Company under this Agreement following
a default by another Member, or the admission of a Person as a Member except as
otherwise provided in Article X hereof following a Transfer;

                        (v)     Approval of transactions between the Company and
any Member, the Manager or any Affiliates of the Members;

                        (vi)    Causing the Company to (A) institute litigation
or arbitration with respect to another Person involving in excess of $2 million
or (B) settle claims, litigation or arbitration if, as a result, the Company is
obligated to pay more than $2 million, unless in either case a Member is
otherwise entitled to take any such action on behalf of the Company under this
Agreement;

                        (vii)   Guaranteeing in the name or on behalf of the
Company, the payment of money or the performance of any contract or other
obligation of any Person where the aggregate of all such outstanding guarantees
by the Company is in excess of $2 million;

                        (viii)  Causing the Company to engage in any business or
activity that is not within the purpose of the Company, as set forth in this
Agreement or to change such purpose;

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<PAGE>

                        (ix)    Amendment or termination of the Company's
certificate of formation or any other Transaction Agreement if the amendment or
termination would have a material adverse effect on the Company;

                        (x)     Admitting any additional Member other than
pursuant to the terms hereof;

                        (xi)    Converting the Company to another type of entity
other than a limited liability company or changing any tax elections provided
for herein;

                        (xii)   Shutting down the Facility; except that after
any announcement by the IRS that the Tax Credits are or were subject to a
reduction of more than 50% under Section 29(b)(1) of the Code, thereafter and
until any subsequent IRS announcement that the Tax Credits have been fully
restored, the continued operation of the Facility shall require consent of
Members holding at least 60% of the Membership Interests as provided in the
final paragraph of this Section 8.3(a);

                        (xiii)  Instructing or permitting the Operator to
produce more than the Quarterly Maximum Production or less than the Quarterly
Minimum Production;

                        (xiv)   Instructing or permitting the Operator to use a
chemical reagent other than the chemical reagent specified in the Request;

                        (xv)    Instructing or permitting the Operator to use a
chemical reagent at the Facility at a concentration less than the levels
specified on Schedule 8.3(a)(xv) hereto;

                        (xvi)   Instructing or permitting the Operator to
decrease the amount of dilution water as compared to the chemical reagent below
the target dilution rate as provided in Schedule 8.3(a)(xv);

                        (xvii)  Instructing or permitting the Operator to
replace, change or modify any of the equipment at the Facility, except for: (A)
the replacement of parts with substantially identical parts; (B) the replacement
or addition of electrical components (excluding motor drives), meters, scales,
sampling and testing, programmable logic controller or other measuring equipment
to improve quality control; (C) the replacement of front-end loaders, vehicles
and other similarly mobile equipment (it being agreed that the Facility itself
is not "mobile equipment" for this purpose); or (D) the addition, replacement or
modification of equipment for the purpose of safety or occupational health
improvements;

                        (xviii) Changing the Independent Chemist or the testing
protocol attached as Schedule 8.3(a)(xviii);

                        (xix)   Responding to requests for, or providing,
approvals, consents, waivers or instructions under or relating to the O&M
Agreement (other than those relating to any operational changes described above)
by, or to, the Manager (Operator), the Operators Representative or the Owners
Representative (as such terms are defined in the O&M Agreement) that involve the
requirements set forth on Schedule 8.3(a)(xix) or that involve spending for the

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<PAGE>

account of the Company of an amount in excess of $5,000,000 (it being
acknowledged that the Board of Managers may approve such actions in the cost
range $1,000,000-$4,999,999); or

                        (xx)    Changing the parameters set by the Members for
contracts entered into by the Company for the purchase of coal and sale of
synfuel, including use of any coals from mines other than those permitted under
feedstock supply agreements existing on the date hereof.

                Except as expressly otherwise provided, the decision of each
Member as to whether or not to consent to any of the foregoing matters shall be
in the sole discretion of such Member. A Member will be deemed to have consented
if no response is received from that Member within 20 Business Days of delivery
to that Member of a request for consent regarding any of the matters described
in clauses (xiv) through (xx) above. A request for consent shall be sent by the
Administrative Member to the Persons listed on Schedule 8.3(a) attached hereto,
which may be modified from time to time by Buyer by written notice to the
Administrative Member.

                (b)     Except as otherwise provided in this Agreement each of
the Members shall be fully protected in relying in good faith upon the records
of the Company and upon such information, opinions, reports or statements
presented to the Company by any other Person who is a Member, the Manager or any
Officer or employee of the Company, or by any other individual as to matters the
Members reasonably believes are within such other individual's professional or
expert competence, including information, opinions, reports or statements as to
the value and amount of the assets, liabilities, profits or losses of the
Company or any other facts pertinent to the existence and amount of assets from
which distribution to the Members might properly be paid.

        Section 8.4.    Board of Managers. The Company shall have a board of
managers (the "Board of Managers") consisting of two individuals appointed by
Buyer and two individuals appointed by MHSI. The initial Board of Managers shall
be the individuals set forth on Exhibit B attached hereto. Any vacancy on the
Board of Managers shall be filled by appointment by the Member who was entitled
to appoint the resigning individual. The Board of Managers shall exercise the
authority provided in Section 8.1 or as otherwise provided in this Agreement or
specifically authorized by the Members in accordance with Section 8.3(a), either
at a meeting called by the Administrative Member or by any member of the Board
of Managers at which at least one representative of Buyer and one representative
of MHSI is present, or, alternatively, by unanimous written consent. No member
of the Board of Managers, in his or her individual capacity as such, shall have
the authority or capacity to bind the Company except pursuant to a resolution of
the Board of Managers expressly authorizing such authority. All decisions of the
Board of Managers taken at a meeting of the Board of Managers (i.e., not taken
by unanimous written consent) shall require the affirmative approval of a
majority of the members of the Board of Managers, provided that such majority
shall include at least one member of the Board of Managers appointed by each of
Buyer and MHSI. Each of Buyer, MHSI and Holdings expressly agrees that no member
of the Board of Managers shall have a fiduciary duty to act on behalf of any or
all of the Members.

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<PAGE>

        Section 8.5.    Insurance. The Company shall acquire and maintain
(including making changes to coverage and carriers) such casualty, general
liability (including product liability), property damage and other types of
insurance with respect to the Facility and/or the operations of the Company, as
is required by the Project Documents, and such additional insurance as may
otherwise be determined by the Manager to be necessary or advisable from time to
time.

        Section 8.6.    Duties. To the extent that, at law or in equity, a
Member has duties (including fiduciary duties) and liabilities relating thereto
to the Company or to any Member or other Person bound by this Agreement, a
Member acting under this Agreement shall not be liable to the Company or to any
Member or other Person bound by this Agreement for its good faith reliance on
the provisions of this Agreement. The provisions of this Agreement, to the
extent that they restrict the duties and liabilities of a Member otherwise
existing at law or in equity, are agreed by the Members to replace such other
duties and liabilities of such Member.

        Section 8.7.    Chemical Change Testing. The Company shall cause tests
to be conducted at least quarterly on the synthetic fuel produced by the
Facility to confirm that such fuel has undergone a significant chemical change
compared to the coal feedstock and chemical reagent from which it is produced.
Samples for such testing shall be taken in accordance with the sampling and
testing protocol for the Company and then shall be forwarded to the Independent
Chemist for analysis. The Manager may not make any material changes to the
sampling and testing protocol without the consent of all the Members, such
consent not to be unreasonably withheld or delayed. The Manager shall Consult
with all Members regarding any other changes to the sampling and testing
protocol. Copies of all reports prepared by the Independent Chemist and used in
computing the Estimated Tax Credits shall be forwarded to each Member with the
Operations Report. Copies of any reports prepared by the Independent Chemist
which do not conclude that the synthetic fuel produced at the Facility has
undergone a significant chemical change shall be forwarded immediately to each
Member.

        Section 8.8.    Limitation on Damages. MHSI's aggregate liability for
damages resulting from a breach or breaches of any of its obligations, covenants
or agreements hereunder, including without limitation, taking any actions in
violation of Section 8.3 hereof, shall not exceed 119% of the aggregate amount
of all Tax Credits allocated to Buyer hereunder at the time such liability
arises, less any indemnification amounts paid by MHSI pursuant to Sections 7.1
or 7.10 of the Purchase Agreement; provided, however, that to the extent such
liability results from any actions taken by the Manager without the express
instruction or consent of MHSI or its agents, the foregoing percentage shall be
53% (rather than 119%).

        Section 8.9.    Suspension of Production. Notwithstanding anything to
the contrary in this Agreement, upon notice from either Buyer or MHSI that it
reasonably believes (based on specific market prices or other public
information) that Tax Credits for the current calendar year will be reduced
under Section 29(b)(1) by 50% or more, which notice shall include an explanation
in reasonable detail of the reasons for such belief, the Members will promptly
Consult in good faith and, unless such notice is withdrawn within five Business
Days, production will be suspended from the end of such five Business Days until
the end of the calendar year (or such earlier date as Members holding 60% or
more of the Membership Interests may specify for resuming production).

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<PAGE>

                                   ARTICLE IX
                                     BUDGET

        Section 9.1.    Preparation. The Budget for the Company for Fiscal Year
2003 is attached hereto as Exhibit C. On or before November 15, 2003, and
November 15th of each year thereafter through the term of this Agreement (except
for the year during which the Termination Date occurs), the Manager will
prepare, and the Board of Managers shall consider, and if thought fit, approve,
a budget for the following Fiscal Year. The initial budget and each annual
budget as prepared by the Manager hereunder is referred to herein as a "Budget."
At the time the Budget is prepared by the Manager and approved by the Board of
Managers, it will include revised financial projections that show Anticipated
Tax Credits and expected losses and Capital Contributions through December 31,
2007.

        Section 9.2.    Content. Each Budget will contain a line-item
specification of projected operating revenues and expenses, including revenues
and expenditures consistent with the Company's operating contracts and the
projected operating deficit and, unless approved otherwise by the Board of
Managers, will reflect production levels not less than the Quarterly Minimum
Production and not greater than the Quarterly Maximum Production.

        Section 9.3.    Amendments and Supplements. During the Fiscal Year
covered by a Budget, the Board of Managers may amend the Budget.

                                    ARTICLE X
                  TRANSFERS; RIGHT OF FIRST REFUSAL, PUT RIGHT

        Section 10.1.   Prohibited Transfers. No Member shall sell, transfer,
assign, convey, or otherwise dispose of all or any part of its Membership
Interest (a "Transfer") or any interest, rights or obligations with respect
thereto except as provided in this Article X. A Member may not pledge, mortgage,
encumber or hypothecate all or any part of its Membership Interest without the
prior consent of the other Members, which consent may be withheld by such other
Members in their reasonable discretion except as provided for in the Buyer
Security Agreement or the Seller Security Agreement. Any attempted Transfer or
pledge, mortgage, encumbrance, or hypothecation, other than in strict accordance
with this Article X, shall be null and void and of no force or effect
whatsoever, and the purported transferee shall have no rights as a Member or
otherwise in or to the Membership Interest.

        Section 10.2.   Conditions to Transfer by MHSI. Upon the satisfaction of
the following conditions, MHSI (which for purposes of this Section 10.2 and
Section 10.5 hereof shall also mean and include Holdings) may Transfer all or a
portion of its Membership Interest and the transferee shall become a Member in
place of MHSI with respect to such transferred Membership Interest:

                (a)     MHSI and the prospective transferee each execute,
acknowledge and deliver to the Company such instruments of transfer and
assignment with respect to such Transfer and such other instruments as are
reasonably satisfactory in form and substance to the Administrative Member to
effect such Transfer and to confirm MHSI's intention that the transferee become
a Member in its place;

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<PAGE>

                (b)     The transferee executes, adopts and acknowledges this
Agreement, and executes such other agreements as the Administrative Member may
reasonably deem necessary or appropriate to confirm the undertaking of the
transferee to be bound by the terms of this Agreement and to assume the
obligations of MHSI under this Agreement and the Purchase Agreement (to the
extent MHSI is to be released from such obligations);

                (c)     The Transfer will not violate any securities laws or any
other applicable federal or state laws or the order of any court having
jurisdiction over the Company or any of its assets;

                (d)     The Transfer will not result in a termination of the
Company under Section 708(b)(1)(B) of the Code, unless MHSI has indemnified the
other Members against the adverse tax effects in a manner acceptable to the
other Members or has caused the IRS to reissue all rulings issued with respect
to the Facility;

                (e)     The Transfer will not cause the Company to be classified
for United States federal tax purposes as an association taxable as a
corporation; and

                (f)     The Seller Parent Guaranty remains in full force and
effect or the transferee's parent or other Affiliate of the transferee (the
"Substitute Seller Guarantor") enters into a guaranty agreement substantially
similar to the Seller Parent Guaranty and such Substitute Seller Guarantor has a
credit rating at least equal to the credit rating of Seller Parent on the
Closing Date;

provided, however, that MHSI may not transfer all or a portion of its Membership
Interest during the twelve-month period following the Closing Date without
Buyer's consent.

        Section 10.3.   Conditions of Transfer by Buyer. Upon the satisfaction
of the following conditions, Buyer may Transfer all or a portion of its
Membership Interest and the transferee shall become a Member with respect to
such transferred Membership Interest:

                (a)     Buyer and the prospective transferee each execute,
acknowledge and deliver to the Company such instruments of transfer and
assignment with respect to such Transfer and such other instruments as are
reasonably satisfactory in form and substance to the Administrative Member to
effect such Transfer and to confirm Buyer's intention that the transferee become
a Member in its place;

                (b)     The transferee executes, adopts and acknowledges this
Agreement, and executes such other agreements as the Administrative Member may
reasonably deem necessary or appropriate to confirm the undertaking of the
transferee to be bound by the terms of this Agreement and to assume the
obligations of Buyer under this Agreement and the Purchase Agreement (to the
extent the Buyer is to be released from such obligations);

                (c)     The Transfer will not violate any securities laws or any
other applicable federal or state laws or the order of any court having
jurisdiction over the Company or any of its assets;

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<PAGE>

                (d)     The Transfer will not result in a termination of the
Company under Section 708(b)(1)(B) of the Code, unless Buyer has indemnified the
other Members against the adverse tax effects in a manner acceptable to the
other Members or has caused the IRS to reissue all rulings issued with respect
to the Facility;

                (e)     The Transfer will not cause the Company to be classified
for United States federal tax purposes as an association taxable as a
corporation; and

                (f)     The Buyer Parent Guaranty remains in full force and
effect or the transferee's parent or other Affiliate of the transferee (the
"Substitute Buyer Guarantor") enters into a guaranty agreement substantially
similar to the Buyer Parent Guaranty and such Substitute Buyer Guarantor has a
credit rating at least equal to the credit rating of the Buyer Parent on the
Closing Date.

        Section 10.4.   Indirect Transfers. No Member shall permit the transfer
of direct or indirect ownership interests in the Member if such transfer would
result in the termination of the Company under Section 708(b)(1)(B) of the Code,
unless such Member has indemnified the other Members against the adverse tax
effects in a manner acceptable to the other Members or has caused the IRS to
reissue all rulings with respect to the Facility.

        Section 10.5.   Right of First Refusal. If either Buyer or MHSI (the
"Transferor") desires to Transfer any of its Membership Interest (other than to
an Affiliate) and the Transfer otherwise complies with the restrictions
contained in this Agreement, the Transferor shall deliver a notice to the
Company and the other Member setting forth the price and other material terms
upon which such Membership Interest will be transferred (a "Transfer Notice").
The other Member shall have the right, for a period of ten Business Days after
receipt of a Transfer Notice, to elect to purchase the subject Membership
Interest at the price set forth in the Transfer Notice and on other terms
substantially similar to the other material terms set forth in the Transfer
Notice. The closing of the sale of the Membership Interest covered by the
Transfer Notice pursuant to this Section 10.5 shall occur 20 Business Days after
the Transferor delivers the Transfer Notice to the other Member of the exercise
of its rights hereunder, or at such other time as the parties agree. If the
other Member elects not to purchase all of such Membership Interest within its
option period, subject to the other restrictions contained in this Agreement,
such other Member may proceed with such Transfer of such Membership Interest;
provided, however, that any such Transfer shall be (a) effected within 120 days
of the election not to exercise the right of first refusal set forth herein and
(b) on terms materially no more favorable to the transferee than the terms set
forth in the last Transfer Notice delivered to the other Member.

        Section 10.6.   Admission. Any transferee of all or part of a Membership
Interest pursuant to a Transfer made in accordance with this Agreement shall be
admitted to the Company as a substitute Member upon its execution of a
counterpart to this Agreement.

        Section 10.7.   Future Cooperation. In the event that any Member desires
to increase or decrease its Membership Interest, the Members agree to Consult in
good faith to consider a sale and purchase of such interest.

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<PAGE>

        Section 10.8.   Put and Redemption Rights. (a) Upon (i) the occurrence
of a Tax Event, or (ii) the exercise by Buyer of its right to defer payments for
low volume pursuant to Section 2.6 of the Purchase Agreement for the fourth time
(the "Fourth Deferral"), Buyer shall have the option, exercisable by delivery of
written notice thereof to the Company within 60 days of such Tax Event or Fourth
Deferral, to require the Company to redeem its Membership Interest, in whole but
not in part, such redemption to occur by the later of (i) the 60th day after the
occurrence of such Tax Event or Fourth Deferral or (ii) the tenth day after the
receipt of written notice from Buyer; provided, however, that exercise of such
option with respect to clause (i) on the basis of the last sentence of the
definition of Tax Event shall be subject to MHSI's right pursuant to Section
2.5(g) of the Purchase Agreement to delay the effective date of Buyer's right to
redeem until December 31, 2003.

                (b)     Upon (i) the exercise by MHSI of its option pursuant to
Section 6.1 of the Purchase Agreement to terminate the Purchase Agreement, MHSI
may require the Company, by delivery of written notice thereof to the Company,
to redeem Buyer's Membership Interest, in whole but not in part.

                (c)     If Buyer exercises the option in paragraph (a) above, or
MHSI exercises the option in paragraph (b) above, (i) Buyer shall reconvey and
transfer to the Company all right, title and interest in and to the Membership
Interest, free and clear of all Encumbrances other than the obligations and
liabilities under Transaction Agreements with respect thereto; (ii) Buyer shall
be deemed to have made the written representations set forth on Exhibit D
attached hereto to MHSI and the Company; (iii) Buyer shall take all such further
actions and execute, acknowledge and deliver all such further documents that are
necessary or useful to effectuate the transfer of the Membership Interest
contemplated by this Section 10.8; (iv) the Company shall effectuate such
redemption; (v) all obligations and liabilities associated with the Membership
Interest will terminate except those obligations and liabilities accrued through
the date of termination; (vi) Buyer will have no further rights as a member of
the Company; (vii) this Agreement shall be amended to reflect Buyer's
resignation as a member of the Company; and (viii) Buyer shall have no further
obligation thereafter to make any contributions to the capital of the Company or
any further payments of the Purchase Price under the Purchase Agreement, except
those obligations and liabilities accrued through the date of termination.
Relief from the obligation of Buyer to make such payments will be deemed
sufficient consideration for the reconveyance and transfer of the Membership
Interest to the Company.

                                   ARTICLE XI
                           DISSOLUTION AND WINDING-UP

        Section 11.1.   Events of Dissolution. The Company shall be dissolved
and its affairs shall be wound up upon the first to occur of any of the
following:

                (a)     the unanimous written consent of the Members to dissolve
and terminate the Company;

                (b)     the entry of a decree of judicial dissolution under
Section 18-802 of the Act;

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<PAGE>

                (c)     the occurrence of the Termination Date; or

                (d)     at any time there are no members of the Company unless
the business of the Company is continued in accordance with the Act.

        Section 11.2.   Distribution of Assets. Upon the occurrence of one of
the events set forth in Section 11.1 hereof, the Members shall appoint one or
more liquidator(s) (which may include one or more Members or the Manager). Upon
the occurrence of such an event, the liquidator(s) shall proceed diligently to
wind-up the affairs of the Company and make final distributions as provided
herein and in the Act. The liquidator(s) may sell any or all Company property,
including to Members. The liquidator(s) shall cause the Company to cease the
production of synthetic fuel. The liquidator(s) shall first pay, satisfy or
discharge from Company funds all of the debts, liabilities and obligations of
the Company (including the Working Capital Loans and all expenses incurred in
liquidation) or otherwise make adequate provision for payment and discharge
thereof (including the establishment of a cash escrow fund for contingent,
conditional or unmatured liabilities in such amount and for such term as the
liquidator may reasonably determine) in the order of priority as provided by
law. The balance of the assets of the Company shall be distributed pro rata to
the Members in accordance with their positive balance in their Capital Accounts,
after giving effect to all contributions, distributions and allocations for all
periods and after first treating the assets as if they had been sold and
allocating the deemed gain among the Members for purposes of adjusting their
Capital Accounts. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 11.2 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member on its Membership Interest in the Company of all the Company's
property and constitutes a compromise to which all Members have consented within
the meaning of the Act. If the assets of the Company remaining after the payment
or discharge of the debts and liabilities of the Company are insufficient to
return Capital Contributions of each Member, such Member shall have no recourse
against the Company or any other Member.

        Section 11.3.   In-Kind Distributions. There shall be no distribution of
assets of the Company in kind without the prior written consent of all of the
Members.

        Section 11.4.   Certificate of Cancellation.

                (a)     When all debts, liabilities and obligations have been
paid and discharged or adequate provisions have been made therefor and all of
the remaining property and assets have been distributed to the Members, a
Certificate of Cancellation shall be executed and filed by the liquidator with
the Secretary of State of the State of Delaware, which certificate shall set
forth the information required by Section 18-203 of the Act.

                (b)     Upon the filing of the Certificate of Cancellation, the
existence of the Company shall cease.

                                   ARTICLE XII
                                  MISCELLANEOUS

        Section 12.1.   Notices. Unless otherwise provided herein, any offer,
acceptance, election, approval, consent, certification, request, waiver, notice
or other communication

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<PAGE>

required or permitted to be given hereunder (collectively referred to as a
"Notice"), shall be in writing and delivered (a) in person, (b) by registered or
certified mail with postage prepaid and return receipt requested, (c) by
recognized overnight courier service with charges prepaid or (d) by facsimile
transmission, directed to the intended recipient at the address of such Member
set forth on Exhibit A attached hereto or at such other address as any Member
hereafter may designate to the others in accordance with a Notice under this
Section 12.1. A Notice or other communication will be deemed delivered on the
earliest to occur of (i) its actual receipt when delivered in person, (ii) the
fifth Business Day following its deposit in registered or certified mail, with
postage prepaid, and return receipt requested, (iii) the second Business Day
following its deposit with a recognized overnight courier service or (iv) the
date of receipt of a facsimile or, if such date of receipt is not a Business
Day, the next Business Day following such date of receipt, provided the sender
can and does provide evidence of successful transmission. Any Notice or other
communication received on a day that is not a Business Day or later than 5:00
p.m. on a Business Day shall be deemed to be received on the next Business Day.

        Section 12.2.   Amendment. Except for an amendment of Exhibit A hereto
to reflect a resignation of a Member from the Company in accordance with the
terms of this Agreement, a Transfer of a Membership Interest in accordance with
the terms of this Agreement, the admission of a new Member in accordance with
the terms of this Agreement, or a change in percentage of Membership Interest,
this Agreement may be changed, modified or amended only by an instrument in
writing duly executed by all of the Members.

        Section 12.3.   Partition. Each of the Members hereby irrevocably
waives, to the extent it may lawfully do so, any right that such Member may have
to maintain any action for partition with respect to the Company property.

        Section 12.4.   Waivers and Modifications. Any waiver or consent,
express, implied or deemed, to or of any breach or default by any Person in the
performance by that Person of its obligations with respect to the Company or any
action inconsistent with this Agreement is not a consent or waiver to or of any
other breach or default in the performance by that Person of the same or any
other obligations of that Person with respect to the Company or any other such
action. Failure on the part of a Person to insist in any one or more instances
upon strict performance of any provisions of this Agreement, to take advantage
of any of its rights hereunder, or to declare any Person in default with respect
to the Company, irrespective of how long that failure continues, does not
constitute a waiver by that Person of its rights with respect to that Person or
its rights with respect to that default until the applicable statute of
limitations period has lapsed. All waivers and consents hereunder shall be in
writing and shall be delivered to the other Members in the manner set forth in
Section 12.1. All remedies afforded under this Agreement shall be taken and
construed as cumulative and in addition to every remedy provided for herein and
by applicable law.

        Section 12.5.   Severability. Except as otherwise provided in the
succeeding sentence, every term and provision of this Agreement is intended to
be severable, and if any term or provision of this Agreement is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the legality or validity of the remainder of this Agreement. The
preceding sentence shall be of no force or effect if the consequence of
enforcing the remainder of

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<PAGE>

this Agreement without such illegal or invalid terms or provision would be to
cause any Party to lose the benefit of its economic bargain.

        Section 12.6.   Successors; No Third-Party Beneficiaries. This Agreement
is binding on and inures to the benefit of the Members and their respective
heirs, legal representatives, successors and permitted assigns. Nothing in this
Agreement shall provide any benefit to any third party or entitle any third
party to any claim, cause of action, remedy or right of any kind, it being the
intent of the Members that this Agreement shall not be construed as a
third-party beneficiary contract.

        Section 12.7.   Entire Agreement. This Agreement, including the Exhibits
and Schedules attached hereto or incorporated herein by reference, constitutes
the entire agreement of the Members with respect to the matters covered herein.
This Agreement supersedes all prior agreements and oral understandings among the
parties hereto with respect to such matters, including, without limitation, the
Original Operating Agreement.

        Section 12.8.   Public Announcements. Each Member shall consult with
every other Member before issuing any public announcement, statement or other
disclosure with respect to the Transaction Agreements or the transactions
contemplated hereby or thereby and no Member shall issue any such public
announcement, statement or other disclosure before such consultation, except as
may be required by any Legal Requirement or by obligations pursuant to any
listing agreement with any national securities exchange. Each Member will have
the right to review in advance all information relating to the transactions
contemplated by the Transaction Agreements that appear in any filing made in
connection with the transactions contemplated hereby or thereby by any other
Member.

        Section 12.9.   Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.

        Section 12.10.  Further Assurances. In connection with this Agreement
and the transactions contemplated hereby, each Member shall execute and deliver
any additional documents and instruments and perform any additional acts that
may be reasonably required or useful to carry out the intent and purpose of this
Agreement and as are not inconsistent with the terms hereof.

        Section 12.11.  Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together will constitute one instrument, binding upon all parties hereto,
notwithstanding that all of such parties may not have executed the same
counterpart.

        Section 12.12.  Consent to Jurisdiction. Without limiting the other
provisions of this Section 12.12 hereof, the Parties agree that any legal
proceeding by or against any Party or with respect to or arising out of this
Agreement may be brought in the United States District Court for the Southern
District of New York or the Supreme Court of the State of New York located in
the Borough of Manhattan in the City of New York, New York. By execution and
delivery of this Agreement, each party irrevocably and unconditionally submits
to the non-exclusive jurisdiction of such courts and to the appellate courts
therefrom solely for the purposes of disputes arising

                                       39

<PAGE>

under this Agreement and not as a general submission to such jurisdiction or
with respect to any other dispute, matter or claim whatsoever.

                The parties hereby waive, to the full extent permitted by law,
any right to stay or dismiss any action or proceeding under or in connection
with this Agreement brought before the foregoing courts on the basis of (i) any
claim that such party is not personally subject to the jurisdiction of the
above-named courts for any reason, or that it or any of its property is immune
from the above-described legal process, (ii) that such action or proceeding is
brought in an inconvenient forum, that venue for the action or proceeding is
improper or that this Agreement may not be enforced in or by such courts, or
(iii) any other defense that would hinder or delay the levy, execution or
collection of any amount to which any party is entitled pursuant to any final
judgment of any court having jurisdiction. IN ADDITION, EACH PARTY KNOWINGLY AND
INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN AND AS TO
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY CLAIM,
COUNTERCLAIM, CROSS-CLAIM OR THIRD-PARTY CLAIM THEREIN.

        Section 12.13.  Confidentiality. The Members shall, and shall cause
their Affiliates and their respective stockholders, members, subsidiaries and
Representatives to, hold confidential and not use in any manner detrimental to
the Company or any Member all information they may have or obtain concerning the
Company and its assets, business, operations or prospects or this Agreement (the
"Confidential Information"); provided, however, that Confidential Information
shall not include information that (a) becomes generally available to the public
other than as a result of a disclosure by a Member or any of its
Representatives, (b) becomes available to a Member or any of its Representatives
on a nonconfidential basis prior to its disclosure by the Company or its
Representatives, (c) is required or requested to be disclosed by a Member or any
of its Affiliates or their respective stockholders, members, subsidiaries or
Representatives as a result of any applicable Legal Requirement or rule or
regulation of any stock exchange, or (d) is required or requested by the IRS in
connection with the Facility or Tax Credits relating thereto, including in
connection with a request for any private letter ruling, any determination
letter or any audit. If such party becomes compelled by legal or administrative
process to disclose any Confidential Information, such party will provide the
other Members with prompt Notice so that the other Members may seek a protective
order or other appropriate remedy or waive compliance with the non-disclosure
provisions of this Section 12.13 with respect to the information required to be
disclosed. If such protective order or other remedy is not obtained, or such
other Members waive compliance with the non-disclosure provisions of this
Section 12.13 with respect to the information required to be disclosed, the
first party will furnish only that portion of such information that it is
advised, by opinion of counsel, is legally required to be furnished and will
exercise reasonable efforts, at the other Members' expense, to obtain reliable
assurance that confidential treatment will be accorded such information,
including, in the case of disclosures to the IRS described in clause (d) above,
to obtain reliable assurance that, to the maximum extent permitted by applicable
Legal Requirements, such information will not be made available for public
inspection pursuant to Section 6110 of the Code. Nothing herein shall be
construed as prohibiting a party hereunder from using such Confidential
Information in connection with (i) any claim against another Member hereunder,
(ii) any exercise by a party hereunder of any of its rights hereunder and (iii)
a disposition by a Member of all or a portion of its Membership Interest or a
disposition of an equity interest in such Member or its Affiliates, provided,
that, such

                                       40

<PAGE>

potential purchaser shall have entered into a confidentiality agreement with
respect to Confidential Information on customary terms used in confidentiality
agreements in connection with corporate acquisitions before any such information
may be disclosed.

        Section 12.14.  Joint Efforts. To the full extent permitted by law,
neither this Agreement nor any ambiguity or uncertainty herein will be construed
against any of the parties hereto, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been prepared by the joint
efforts of the respective attorneys for, and has been reviewed by, each of the
parties hereto.

        Section 12.15.  Specific Performance. The Members agree that irreparable
damage will result if this Agreement is not performed in accordance with its
terms, and the Members agree that any damages available at law for a breach of
this Agreement would not be an adequate remedy. Therefore, to the full extent
permitted by law, the provisions hereof and the obligations of the Members
hereunder shall be enforceable in a court of equity, or other tribunal with
jurisdiction, by a decree of specific performance, and appropriate injunctive
relief may be applied for and granted in connection therewith. Such remedies and
all other remedies provided for in this Agreement shall, however, be cumulative
and not exclusive and shall be in addition to any other remedies that a Member
may have under this Agreement, at law or in equity.

        Section 12.16.  Survival. All indemnities and reimbursement obligations
made pursuant to this Agreement shall survive dissolution and liquidation of the
Company until expiration of the longest applicable statute of limitations
(including extensions and waivers) with respect to the matter for which a Person
would be entitled to be indemnified or reimbursed, as the case may be.

        Section 12.17.  Construction. As used herein, the singular shall include
the plural and all references herein to one gender shall include the others, as
the context requires. Unless the context requires otherwise, the words this
Agreement, hereof, hereunder, herein, hereby, thereof, thereunder, or words of
similar import refer to this Agreement as a whole and not to a particular
Article, Section, subsection, clause or other subdivision hereof. Unless
otherwise expressly provided, all references to Articles, Sections or Exhibits
are to Articles, Sections or Exhibits of this Agreement. The headings and
captions are used in this Agreement for convenience only and shall not be
considered when determining the meaning of any provisions of this Agreement.

        Section 12.18.  Other Activities. Nothing contained herein shall be
interpreted as restricting any Member from engaging in or owning interests in
other businesses similar to or competitive with the business of the Company, and
the other Member shall have no rights in, and shall not be entitled to pursue
any rights in or to derive any profits from, such other businesses.

        Section 12.19.  Effective Date. This Agreement shall have no force or
effect unless and until the Closing, as defined in the Purchase Agreement, has
occurred, at which time this Agreement shall automatically and without any
further action become effective.

               [Remainder of this page left intentionally blank.]

                                       41

<PAGE>

        IN WITNESS WHEREOF, the parties, each a Member, have caused this Amended
and Restated Limited Liability Company Agreement to be signed by their
respective duly authorized officers as of the date first above written.

                                           SYNTHETIC AMERICAN FUEL ENTERPRISES
                                           HOLDINGS, INC.

                                           By:  /s/ Mark W. Brugger
                                              ------------------------------

                                           Name:    Mark W. Brugger

                                           Title:   President

                                           MARRIOTT HOTEL SERVICES, INC.

                                           By:  /s/ Mark W. Brugger
                                              ------------------------------

                                           Name:    Mark W. Brugger

                                           Title:   Vice President

                                           SERRATUS LLC

                                           By:  /s/
                                              ------------------------------

                                           Name:

                                           Title:<PAGE>

                                                                    EXHIBIT 10.4

                  AGREEMENT FOR PURCHASE OF MEMBERSHIP INTEREST

                                       in

                   Synthetic American Fuel Enterprises II, LLC

                                  by and among

               SYNTHETIC AMERICAN FUEL ENTERPRISES HOLDINGS, INC.,

                         MARRIOTT HOTEL SERVICES, INC.,

                                       and

                                  SERRATUS LLC

                                   dated as of

                                January 28, 2003

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                              PAGE
<S>                                                                           <C>
ARTICLE 1 DEFINED TERMS.......................................................   2

1.1   Defined Terms...........................................................   2
1.2   Construction of Certain Terms and Phrases...............................   2

ARTICLE 2 SALE AND PURCHASE OF MEMBERSHIP INTEREST............................   3

2.1   Agreement to Sell and Buy...............................................   3
2.2   Purchase Price..........................................................   3
2.3   Base Note...............................................................   3
2.4   Fixed Deferred Payments.................................................   3
2.5   Variable Deferred Payments..............................................   3
2.6   Low Production Volume...................................................   8
2.7   Tax Event...............................................................   8
2.8   Payments................................................................   8
2.9   Execution and Closing...................................................   8
2.10  Actions to Occur on the Execution Date..................................  10
2.11  First Quarterly Payment Date............................................  12

ARTICLE 3 REPRESENTATIONS AND WARRANTIES......................................  12

3.1   Representations and Warranties Regarding Seller, MHSI and the
Operating Company.............................................................  12
3.2   Representations and Warranties Regarding the Operating Companies
- Historical..................................................................  14
3.3   Representations and Warranties Regarding the Operating Company..........  14
3.4   Updating of Schedules...................................................  22
3.5   Application of Representations and Warranties to 0.1% Interest..........  22
3.6   Representations and Warranties of Buyer.................................  22

ARTICLE 4 CERTAIN COVENANTS...................................................  23

4.1   Conduct of Operations...................................................  23
4.2   Existing Accounts Payable...............................................  24
4.3   Independent Engineer....................................................  24

ARTICLE 5 TAX MATTERS.........................................................  24

5.1   Tax Returns and Proceedings.............................................  24
5.2   Transaction Taxes.......................................................  25
</TABLE>

                                       -i-

<PAGE>

<TABLE>
<S>                                                                             <C>
5.3   Private Letter Ruling...................................................  25

ARTICLE 6 TERMINATION.........................................................  26

6.1   Termination.............................................................  26
6.2   Procedure and Effect of Termination.....................................  27

ARTICLE 7 INDEMNIFICATION.....................................................  28

7.1   Indemnification of Buyer................................................  28
7.2   Indemnification of Seller...............................................  28
7.3   Defense of Third Party Claims...........................................  28
7.4   Direct Claims...........................................................  30
7.5   After-Tax Basis.........................................................  30
7.6   Express Negligence Rule.................................................  31
7.7   No Duplication..........................................................  31
7.8   Sole Remedy.............................................................  31
7.9   Survival................................................................  31
7.10  Indemnification as to Historical Representations and Warranties;
Other Indemnification.........................................................  32

ARTICLE 8 GENERAL PROVISIONS..................................................  32

8.1   Exhibits and Schedules..................................................  32
8.2   Further Actions.........................................................  32
8.3   Amendment, Modification and Waiver......................................  33
8.4   Severability............................................................  33
8.5   Expenses and Obligations................................................  33
8.6   Parties in Interest.....................................................  33
8.7   Notices.................................................................  33
8.8   Counterparts............................................................  35
8.9   Entire Agreement........................................................  35
8.10  Governing Law; Choice of Forum; Waiver of Jury Trial....................  35
8.11  Public Announcements....................................................  35
8.12  Assignment..............................................................  35
8.13  Relationship of Parties.................................................  36
</TABLE>

                                      -ii-

<PAGE>

Annex I                 Definitions

Exhibits:
Exhibit A               Form of Base Note
Exhibit B               Form of Operations Report
Exhibit C               Form of Notice of Deferral of Scheduled Payments
Exhibit D               Form of Ruling Request
Exhibit E               Form of Buyer Parent Guaranty
Exhibit F               Form of Seller Parent Guaranty
Exhibit G               Form of Buyer Pledge and Security Agreement
Exhibit H               Form of Seller Pledge and Security Agreement
Exhibit I               Amended and Restated Limited Liability Company
                        Agreement of Synthetic American Fuel Enterprises
                        II, LLC
Exhibit J               Financial Statements
Exhibit K               Form of Customer Certificate
Exhibit L               Form of Escrow Agreement

Schedules:
Schedule 2.4            Fixed Deferred Payment Schedule
Schedule 2.5(b)         Estimated Tax Credit Methodology
Schedule 3.1(a)         Organizational Documents of the Company
Schedule 3.1(e)         Required Consents
Schedule 3.2            Historical Representations and Warranties
Schedule 3.3(a)         Liabilities of the Operating Company
Schedule 3.3(b)         Permits
Schedule 3.3(c)         Absence of Litigation
Schedule 3.3(d)         Insurance
Schedule 3.3(f)         Leased Real Property
Schedule 3.3(g)         Personal Property
Schedule 3.3(i)(i)      Environmental Matters
Schedule 3.3(i)(ii)     Environmental Matters
Schedule 3.3(i)(iii)    Environmental Matters
Schedule 3.3(k)         Company Contracts
Schedule 3.3(l)         Employee Matters
Schedule 3.3(p)(i)      Section 29
Schedule 3.3(p)(iv)A    List of Excluded Boxes
Schedule 3.3(p)(iv)B    Due Diligence Index
Schedule 3.3(p)(vii)    Section 29
Schedule 4.1            Testing Protocol

                                      -iii-

<PAGE>

                  AGREEMENT FOR PURCHASE OF MEMBERSHIP INTEREST

                This Agreement for Purchase of Membership Interest (this
"Agreement") is made and entered into as of January 28, 2003, by and among
Serratus LLC, a Delaware limited liability company (the "Buyer"), Synthetic
American Fuel Enterprises Holdings, Inc., an Oregon corporation ("Seller") and
Marriott Hotel Services, Inc., a Delaware corporation ("MHSI").

                                 R E C I T A L S

        A.      Seller owns a 49.9% membership interest in Synthetic American
Fuel Enterprises II, LLC, a Delaware limited liability company (the "Operating
Company" or "Company"), which, together with a 49.9% membership interest in
Synthetic American Fuel Enterprises I, LLC, a Delaware limited liability company
("SynAmerica I"), are the only assets of Seller.

        B.      Buyer owns a 0.1% membership interest in each of the Company and
SynAmerica I.

        C.      MHSI owns all of the outstanding capital stock of Seller and the
remaining 50% membership interests in each of the Operating Company and
SynAmerica I.

        D.      On the Closing Date (as defined herein) Seller will sell to
Buyer a 48.8% membership interest in the Company and concurrently therewith
Seller will sell to Buyer a 48.8% membership interest in SynAmerica I pursuant
to the SynAmerica I Purchase Agreement (as defined herein).

        E.      The Operating Company owns as its only assets two coal-based
synthetic fuel production facilities located in Alabama and one such facility in
Illinois (the "Facilities") and related real property interests, contracts,
licenses and permits.

        F.      Marriott International, Inc. ("Marriott") acquired all of the
capital stock of Seller and 49% of the membership interests in the Operating
Company and SynAmerica I from PacifiCorp Financial Services, Inc. ("PacifiCorp")
pursuant to a stock purchase agreement dated as of October 15, 2001 by and among
PacifiCorp, Marriott and Birmingham Syn Fuel I, Inc. (the "PacifiCorp/Marriott
Agreement").

        G.      Seller desires to sell, and Buyer desires to purchase from
Seller, a 48.8% membership interest in the Operating Company (together with the
0.1% membership interest, the "Membership Interest"), and thereby indirectly
acquire an interest in the Facilities, all in accordance with the terms and
subject to the conditions set forth herein.

        H.      On the date hereof, Seller, MHSI and Buyer will enter into the
Amended LLC Agreement (as defined herein), to be effective as of the Closing
Date.

        I.      Marriott (the "Seller Parent"), the sole owner of MHSI, is
deriving substantial benefit from the sale by Seller and the purchase by Buyer
of the Membership Interest and, in consideration thereof, has executed and
delivered to Buyer as of the date hereof the Seller Parent Guaranty (as
hereinafter defined), pursuant to which Seller Parent guarantees in favor of
Buyer

                                        1

<PAGE>

the obligations of Seller and MHSI hereunder and of MHSI under the Amended LLC
Agreement.

        J.      __________________ (the "Buyer Parent"), an Affiliate of Buyer,
is deriving substantial benefit from the sale by Seller and the purchase by
Buyer of the Membership Interest and, in consideration thereof, has executed and
delivered to Seller as of the date hereof the Buyer Parent Guaranty (as
hereinafter defined) pursuant to which Buyer Parent guarantees in favor of
Seller, MHSI and the Operating Company certain obligations of Buyer hereunder
and under the Amended LLC Agreement.

                NOW, THEREFORE, in consideration of the respective
representations, warranties, covenants, agreements, and conditions hereinafter
set forth, and other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:

                                    ARTICLE 1
                                  DEFINED TERMS

        1.1     Defined Terms. Capitalized terms used but not otherwise defined
herein shall have the meanings given such terms in Annex I hereto.

        1.2     Construction of Certain Terms and Phrases. Titles appearing at
the beginning of any Articles, Sections, subsections, or other subdivisions of
this Agreement are for convenience only, do not constitute any part of such
Articles, Sections, subsections or other subdivisions, and shall be disregarded
in construing the language contained therein. The words "this Agreement,"
"herein," "hereby," "hereunder," and "hereof," and words of similar import,
refer to this Agreement as a whole and not to any particular subdivision unless
expressly so limited. The words "this Section," "this subsection," and words of
similar import, refer only to the Sections or subsections hereof in which such
words occur. The word "or" is not exclusive, and the word "including" (in its
various forms) means "including without limitation." Pronouns in masculine,
feminine, or neuter genders shall be construed to state and include any other
gender and words, terms, and titles (including terms defined herein) in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise requires. Unless the context otherwise requires, all
defined terms contained herein shall include the singular and plural and the
conjunctive and disjunctive forms of such defined terms, and the term "Annex,"
"Exhibit" or "Schedule" shall refer to an Annex, Exhibit or Schedule attached to
this Agreement. All references to the Code, U.S. Treasury regulations or other
governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.

                                        2

<PAGE>

                                    ARTICLE 2
                    SALE AND PURCHASE OF MEMBERSHIP INTEREST

        2.1     Agreement to Sell and Buy. Upon the terms and subject to the
conditions set forth in this Agreement, Seller shall sell, assign, transfer and
deliver to Buyer on the Closing Date, and Buyer shall purchase on the Closing
Date, a 48.8% membership interest in the Company for the consideration set forth
in Section 2.2.

        2.2     Purchase Price. The aggregate purchase price (the "Purchase
Price") for the Membership Interest being purchased under this Agreement,
subject to adjustment as set forth below, will be comprised of a cash payment on
the Closing Date in the amount of $1,000,000, the Base Note, the Fixed Deferred
Payments and Variable Deferred Payments as provided in Sections 2.3, 2.4 and
2.5.

        2.3     Base Note. On the Execution Date, Buyer shall execute and
deliver to Seller the promissory note in the amount of $17,000,000 in the form
attached hereto as Exhibit A (the "Base Note").

        2.4     Fixed Deferred Payments. Commencing on the first Quarterly
Payment Date following the Closing Date and on each Quarterly Payment Date
thereafter, continuing through the Quarterly Payment Date immediately following
December 31, 2007 (the "Fixed Payment Term"), Buyer shall make a payment to
Seller (a "Fixed Deferred Payment") as set forth on Schedule 2.4 hereto (subject
to adjustment as provided in Section 2.6 hereof). The Parties hereto acknowledge
and agree that the obligation of Buyer to make such Fixed Deferred Payments
pursuant to this Section 2.4, (x) is solely the obligation of Buyer and in no
event whatsoever shall any member of Buyer, any Affiliate of Buyer (including
Buyer Parent) or Affiliate of any member of Buyer have any obligation whatsoever
or any liability in any way to make such Fixed Deferred Payments, and (y) is
nonrecourse as against Buyer, and shall be satisfied only out of the Membership
Interest and collateral pledged pursuant to the Buyer Security Agreement. The
Fixed Deferred Payments shall be subordinated to payments then due and owing
under the Base Note.

        2.5     Variable Deferred Payments.

                (a)     Commencing on the first Quarterly Payment Date following
the Closing Date and on each Quarterly Payment Date thereafter continuing
through the Quarterly Payment Date immediately following December 31, 2007 or,
if earlier, the permitted withdrawal of Buyer (or of its successors or assigns,
as the case may be) as a member of the Operating Company, Buyer shall make a
payment to Seller in an amount (a "Variable Deferred Payment") equal to the
excess, if any, of (x) the Applicable Percentage of the Estimated Tax Credits
(as defined below) with respect to the prior Quarter, minus (y) the sum of (I)
the payment under the Base Note made with respect to such Quarter, (II) the
Fixed Deferred Payment made with respect to such Quarter as provided in Section
2.4 above and as adjusted pursuant to Section 2.6 hereof and (III) the capital
contributions made by Buyer, or by Buyer Parent on its behalf, to the Operating
Company in respect of such Quarter pursuant to Section 4.1 of the Amended LLC
Agreement. To the extent that the amount described in clause (y) of the
preceding sentence with respect to any Quarter exceeds the amount described in
clause (x) of the preceding sentence with respect to

                                        3

<PAGE>

such Quarter, the amount of the Variable Deferred Payment for such Quarter shall
be zero and such excess of (y) over (x) shall be carried forward to offset
future Variable Deferred Payments.

                (b)     "Estimated Tax Credits," with respect to any period
after the Closing Date, means the estimated Tax Credits generated during such
period as a result of the production of solid synthetic fuel at the Facilities
and the sale of such synthetic fuel to unrelated third parties that are
allocable to Buyer in respect of Buyer's ownership of the Membership Interest,
which estimate will be made in accordance with the methodology set forth in
Schedule 2.5(b) hereto; provided, however, that Excluded Sales will not be taken
into account. The Parties shall direct the Administrative Member to prepare and
deliver on or before the tenth day after the end of each Quarter or, in the case
of the first Quarter ending after the date hereof, the partial Quarter, to
Buyer, Seller and MHSI a written report (each, an "Operations Report"), in the
form attached hereto as Exhibit B, setting forth the following: (i) a
calculation of the Estimated Tax Credits made in accordance with the methodology
set forth in Schedule 2.5(b), and the amounts allocated to each Party for such
Quarter, (ii) Seller's, MHSI's and Buyer's capital contributions to be made to
the Operating Company pursuant to Section 4.1(c) of the Amended LLC Agreement
for such Quarter, (iii) the payment on the Base Note, the Fixed Deferred Payment
and Variable Deferred Payment owed by Buyer for such Quarter or partial Quarter
computed in accordance with Schedule 2.5(b) hereof and any recomputations made
by the Administrative Member under Sections 2.5(d) and 2.5(e) hereof during the
period after the date of the relevant prior Operations Report and (iv) MHSI's
initial estimate of the net taxable loss of the Operating Company for the
Quarter and of the depreciation available to Buyer for the Quarter with respect
to the special basis increase under Section 743(b) of the Code relating to
Buyer's purchase of its interest in the Operating Company. Each Operations
Report will include a detailed listing by customer of all synthetic fuel sales
from the Facilities and identification of any such sales that were Excluded
Sales, the allocation of receipts and costs to any sales of Pre-Sale Inventory,
and the average energy content per ton of synfuel produced and sold. Attached to
the Operations Report will be the analyses from the Independent Chemist of the
synthetic fuel produced during the Quarter. In addition, the Manager will
certify as part of the Operations Report: (w) the number of tons of synthetic
fuel sold to unrelated parties and that were not Excluded Sales, (x) a list of
payments proposed to be made from any capital contributions with respect to that
Quarter to the Operating Company, (y) that there was no change during the
Quarter to the equipment at the Facilities or, alternatively, that the only
changes were a list of repairs and improvements described in the Operations
Report, and (z) the synthetic fuel produced during the Quarter was produced in
compliance with the Amended LLC Agreement, the Request and the Private Letter
Ruling. Subject to Section 2.5(c), the Operations Report will be final and
binding on the Parties and will serve as the basis for the determination of
Variable Deferred Payments payable hereunder for such Quarter. Subject to
Section 2.5(c), Buyer shall pay Fixed Deferred Payments and Variable Deferred
Payments on or before the later of (i) the twentieth day after the end of the
Quarter or partial Quarter to which each such Fixed Deferred Payment and
Variable Deferred Payment relates and (ii) the tenth day after Buyer receives
the Operations Report from the Administrative Member (or, if such day is not a
Business Day, on the next succeeding Business Day) (each such date is referred
to herein as a "Quarterly Payment Date").

                (c)     If Buyer disputes the Administrative Member's
calculation of any items in an Operations Report, then Buyer shall notify the
Administrative Member and Seller not more than ten Business Days after Buyer has
received the applicable Operations Report from the

                                        4

<PAGE>

Administrative Member, and, in such event, Buyer, Seller and the Administrative
Member shall consider the issues raised or in dispute and discuss such issues
with each other and attempt to reach a mutually satisfactory agreement. If the
dispute as to the Administrative Member's calculations is not promptly resolved
within ten Business Days of such notification of the dispute, Buyer shall pay,
on such date, any undisputed portion of the amount then due, and any amount in
dispute may be withheld pending resolution of the dispute; it being understood
that such sums as are withheld by Buyer in accordance with this Section 2.5(c)
shall not give rise to any of Seller's rights under Section 6.1(a) hereof or the
Buyer Security Agreement unless (i) such dispute is resolved in Seller's favor
and (ii) Buyer fails to pay such disputed amount (together with interest at the
Commercial Paper Rate) within the time period specified below. Thereafter, Buyer
and MHSI shall each present their interpretations to the Accounting Firm, and
shall instruct the Accounting Firm to determine the correct amount of the
calculations in dispute (if applicable, in accordance with the methodology set
forth in Schedule 2.5(b) and Exhibit B) and to resolve the dispute promptly, but
in no event more than 30 calendar days after having the dispute submitted to it.
The Accounting Firm will make a determination as to each of the items in
dispute, which must be (i) in writing, (ii) furnished to each of MHSI and Buyer
and (iii) made in accordance with this Agreement, and which determination,
absent manifest error, will be conclusive and binding on Seller, MHSI and Buyer
and may be enforced in the courts specified in Section 8.10 hereof. In the event
the Accounting Firm determines that any of the calculations in dispute in the
Operations Report was incorrect, the fees and expenses of the Accounting Firm
shall be borne by MHSI, and in all other cases the fees and expenses of the
Accounting Firm shall be borne by Buyer. Each of MHSI and Buyer shall use
reasonable efforts to cause the Accounting Firm to render its decision as soon
as reasonably practicable, including by promptly complying with all reasonable
requests by the Accounting Firm for information, books, records and similar
items. Upon receipt by Buyer of the Accounting Firm's written determination of
the resolution of any such dispute in Seller's favor, Buyer shall pay all or any
portion of the amounts in dispute in accordance with such resolution plus
interest at the Commercial Paper Rate on the amounts in dispute from the date
such amounts were due until the date of payment thereof, such payment date being
in any event no later than ten Business Days from the receipt of such written
determination. Upon the resolution of any such dispute in Buyer's favor, the
amount in dispute shall not be considered due and owing and Seller and MHSI
shall have no rights whatsoever with respect to such amount under Section 6.1(a)
hereof or the Buyer Security Agreement.

                (d)     Each year within 15 Business Days following the later to
occur of (i) completion of the audited financial statements of the Operating
Company for the immediately preceding Fiscal Year and (ii) publication or
disclosure by the IRS of the revised inflation adjustment factors and the
reference prices applicable to the immediately preceding Fiscal Year pursuant to
Section 29(d)(2) of the Code, the Administrative Member shall recompute the
aggregate Estimated Tax Credits for each of the Quarters of the preceding Fiscal
Year using (I) such revised factor and taking into account the effect, if any,
of the operation of Section 29(b)(1) of the Code based on such reference price
and (II) information on actual sales to unrelated persons (as defined in Section
29(d)(7) of the Code) of solid synthetic fuel produced in the Facilities
reflected in such audited financial statements (such recomputed amount for any
Quarter being the "Actual Credit Amount"). For purposes hereof, the "Annual
Adjustment Amount" shall mean the aggregate of the following for all of the
Quarters of such preceding Fiscal Year: (w) the product of (I) the Applicable
Percentage and (II) the Actual Credit Amount for each Quarter, reduced by (x)
the Fixed Deferred Payment and the payments under the Base Note made

                                        5

<PAGE>

with respect to such Quarter but, in the case of this clause (x) only, not
reduced below zero, (y) the Variable Deferred Payment made with respect to such
Quarter and (z) capital contributions made by Buyer to the Operating Company
with respect to such Quarter. If the Annual Adjustment Amount is a positive
amount, such amount will be added to the amount of Buyer's Variable Deferred
Payment otherwise due on the Adjustment Date. If the Annual Adjustment Amount is
a negative amount, such amount will be used to reduce Buyer's Variable Deferred
Payment otherwise due on the Adjustment Date, or if such amount exceeds the
amount of Buyer's Variable Deferred Payment otherwise due on such date, the
excess amount will be successively credited against Buyer's Variable Deferred
Payments as they otherwise become due thereafter. In the event that the actual
Tax Credits claimed on the Company's federal income tax return for any such
Fiscal Year is different from the Actual Credit Amount for such Fiscal Year as
computed pursuant to this Section 2.5(d), an additional adjustment amount will
be promptly calculated and applied to adjust Buyer's Variable Deferred Payment
in the same manner as described above for the Annual Adjustment Amount.

                (e)     In the Fiscal Year that the Final Adjustment Date
occurs, within 15 Business Days following the later to occur of (i) completion
of the audited financial statements of the Operating Company for the immediately
preceding Fiscal Year and (ii) publication or disclosure by the IRS, pursuant to
Section 29(d)(2) of the Code, of the revised inflation adjustment factors and
the reference prices applicable to the immediately preceding Fiscal Year, the
Administrative Member shall calculate the Actual Credit Amount for such Fiscal
Year. For purposes hereof, the "Final Adjustment Amount" shall mean the amount
equal to the aggregate of the following for all of the Quarters of such
preceding Fiscal Year: (w) the product of (I) the Applicable Percentage and (II)
the Actual Credit Amount for each Quarter, reduced by (x) the Fixed Deferred
Payment and payments under the Base Note made with respect to such Quarter but,
in the case of this clause (x) only, not reduced below zero, (y) the Variable
Deferred Payment made with respect to such Quarter and (z) capital contributions
made by Buyer to the Operating Company with respect to such Quarter. If the
Final Adjustment Amount is positive, Buyer shall pay such amount to Seller on
the Final Adjustment Date; provided, however, that if any amount required to be
credited against the Variable Deferred Payments pursuant to Section 2.5(d)
exceeds such amount, Seller shall pay Buyer an amount equal to such excess. If
the Final Adjustment Amount is negative, then Seller shall pay such amount to
Buyer on the Final Adjustment Date plus any amount required to be credited
against the Variable Deferred Payments pursuant to Section 2.5(d). In the event
that the actual Tax Credits claimed on the Company's federal income tax return
for such Fiscal Year is different from the Actual Credit Amount for such Fiscal
Year as computed pursuant to this Section 2.5(e), an additional adjustment
amount will be promptly calculated and paid in the same manner as described
above for the Final Adjustment Amount.

                (f)     On or before the Closing Date, and within ten days after
the end of each Quarter thereafter, the Administrative Member shall provide to
Buyer a list of Persons to whom the Company anticipates or is considering
selling synthetic fuel, other than Pre-Sale Inventory (including information
reasonably available to the Administrative Member regarding the ultimate
ownership of such Person and applicable CUSIP number) (the "Customer List").
Seller shall, from time to time after the Closing Date, supplement the Customer
List with any additional Persons to whom the Operating Company anticipates or is
considering selling synthetic fuel during such Fiscal Year. Any such
supplemental Customer Lists shall be sent to Buyer by

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<PAGE>

registered or certified mail with postage prepaid and return receipt requested.
Within 10 Business Days following the Administrative Member's delivery of the
Customer List (or supplement thereto) or the Administrative Member's request as
to any specific Person that may be made from time to time, Buyer shall deliver
to the Administrative Member a "Customer Certificate" in the form attached as
Exhibit K hereto notifying the Administrative Member whether, as to each such
Person, the Person is a Cleared Person. As to any such Person, if Buyer fails to
deliver the Customer Certificate indicating that such Person is not a Cleared
Person within such 10 Business Day period, the Person shall be deemed to be a
Cleared Person until Buyer delivers to the Administrative Member a Customer
Certificate notifying the Administrative Member that such Person is not a
Cleared Person. To the extent any such Person is identified by Buyer in the
Customer List as not being a Cleared Person, the Parties will meet, discuss and
negotiate in good faith to develop and agree upon appropriate actions to
maximize the full value of the Tax Credits generated by the production and sale
of synthetic fuel at the Facilities, including, without limitation, possible
divestiture by Buyer or its Affiliates of interests in such customer and the
sale by Buyer of part or all of the Membership Interest to a third party as
provided in the Amended LLC Agreement or to Seller or its Affiliates. The
Administrative Member hereby agrees to keep confidential the information
contained in any Customer Certificate delivered by Buyer (except as necessary to
enforce this Agreement and any of the other Transaction Agreements or to the
extent such information made public by a party other than the Administrative
Member is required by law to disclose such information). Buyer hereby agrees to
keep confidential the information contained in any Customer List, or supplement
thereto, delivered by the Administrative Member (except as necessary to enforce
this Agreement and any of the other Transaction Agreements or to the extent such
information made public by a party other than Buyer and its Affiliates or Buyer
is required by law to disclose such information).

                (g)     Notwithstanding anything to the contrary contained in
this Article II, until the earlier of the delivery by Buyer to the Operating
Company and to Seller of a Termination Notice or December 31, 2003, all payments
required to be made by Buyer under this Article II, for the period from the
Closing Date until the foregoing earlier event (the "Initial Period"), up to an
amount equal to 44 percent of the Estimated Tax Credits for such period, shall
be made to the Escrow Agent to be held in the Escrow Account in accordance with
the Escrow Agreement. If Buyer delivers a Termination Notice to the Operating
Company and to Seller on or before December 31, 2003, (i) Buyer, MHSI and Seller
shall promptly thereafter instruct the Escrow Agent to pay over to Buyer the
amount in the Escrow Account (together with income earned as to such funds) on
the Termination Date, and, upon such payment being made, the Escrow Agreement
shall terminate, and (ii) thereafter, the aggregate of payments of Purchase
Price hereunder and capital contributions under the Amended LLC Agreement to be
made by Buyer (for the portion of the Initial Period as to which such payments
have not been made at the Termination Date) shall be made only to the extent of
75 percent of the Estimated Tax Credits; provided, however, that if the
Termination Date in the Termination Notice is prior to December 31, 2003,
Marriott in its sole discretion may elect, by notice in writing to Buyer within
five Business Days of receipt of the Termination Notice, to require Buyer to
remain as a partner in the Operating Company until December 31, 2003, in which
case the aggregate of payments of Purchase Price hereunder and capital
contributions under the Amended LLC Agreement to be made by Buyer for the period
from the Termination Date through December 31, 2003 shall be made only to the
extent of 70 percent of the Estimated Tax Credits of the amount otherwise

                                        7

<PAGE>

required to be paid. If Buyer does not deliver a Termination Notice before the
close of business on December 31, 2003, (y) Buyer, MHSI and Seller shall
promptly thereafter instruct the Escrow Agent to pay over to Seller the amount
in the Escrow Account (together with income earned as to such funds), and, upon
such payment being made, the Escrow Agreement shall terminate and (z)
thereafter, Buyer shall make in full (rather than in part to the Escrow Account)
all payments required to be made by it under this Article II.

                (h)     To the extent Buyer elects to waive financial
participation in the Company pursuant to Section 4.1(h) of the Amended LLC
Agreement, and no Tax Credits are allocated to Buyer as provided in the Amended
LLC Agreement, Buyer shall have no obligation to make a Variable Deferred
Payment on the Quarterly Payment Date following the end of the Quarter for which
the waiver is effective.

        2.6     Low Production Volume. In the event that the aggregate sales
(not counting Excluded Sales) of synthetic fuel produced at the Facilities fall
below 525,000 tons for any Quarter (for any reason, including without
limitation, a force majeure event), Buyer may defer the scheduled payment under
the Base Note and the Fixed Deferred Payment for such Quarter by giving Seller
written notice of such deferral on or before the Quarterly Payment Date in the
form of a notice substantially similar to Exhibit C hereto. Notwithstanding the
foregoing, Buyer may not defer the scheduled payment under the Base Note and the
Fixed Deferred Payments hereunder more than four times in aggregate during the
Fixed Payment Term. If Buyer makes the scheduled payment under the Base Note,
but defers the Fixed Deferred Payment, that shall be regarded as a deferral for
purposes of the preceding sentence. In the event of any deferral under this
Section 2.6, the deferred amounts will be reallocated over the remaining
scheduled payments, assuming an interest rate of 8% per annum on such deferred
amounts.

        2.7     Tax Event. Upon the occurrence of a Tax Event and redemption of
the Membership Interest by the Operating Company in accordance with Section 10.8
of the Amended LLC Agreement, Buyer shall have no further obligation to make
Fixed Deferred Payments, Variable Deferred Payments or payments under the Base
Note, other than any such payments that are due and payable at the time of such
redemption but which have not been paid in full.

        2.8     Payments. All payments to be made pursuant to this Article 2
shall be made by wire transfer of immediately available funds to an Account of
Seller.

        2.9     Execution and Closing.

                (a)     The execution of this Agreement and the deliveries set
forth in Section 2.10 will take place (i) at the offices of Jones Day in
Washington, D.C., at 10:00 a.m., local time, on the date hereof or (ii) at such
other place and time as Buyer, Seller and MHSI may agree in writing (the
"Execution Date"). The Parties agree that their respective rights and
obligations hereunder and under the documents delivered pursuant to Section
2.10(a) and Section 2.10(b) shall not take effect until the Closing Date, that
such documents will be held in escrow from the Execution Date to the Closing
Date by Jones Day and released only pursuant to joint instructions of MHSI and
Buyer, and that such documents shall be of no force and effect until the Closing
is consummated.

                                        8

<PAGE>

                (b)     Subject to Section 2.9(c) below, the Closing will take
place within 30 days after receipt from the IRS of an additional private letter
ruling (the "Private Letter Ruling") containing the following rulings:

                        (i)     the Operating Company, using the Covol 298-1
reagent, will produce a "qualified fuel" within the meaning of Section
29(c)(1)(C) of the Code;

                        (ii)    production of qualified fuel at the Facilities
will be attributable solely to the Operating Company, entitling the Operating
Company to the Tax Credit on such fuel sold to unrelated parties; and

                        (iii)   the Tax Credit may be passed through to and
allocated among the members of the Operating Company (which shall be defined in
the Private Letter Ruling as MHSI, Buyer and Seller), in accordance with each
member's interest in the Operating Company when the Tax Credit arises, which is
determined based on a valid allocation of the receipts from the sale of the
qualified fuel.

                (c)     Buyer shall not be obligated to consummate the Closing
if the Private Letter Ruling is not issued by July 31, 2003 or if, at the time
the requirements of Section 2.9(b) are satisfied, either (i) a Tax Event has
occurred; (ii) MHSI and Seller have not funded the Operating Company fully for
the period up to and including the Closing Date; (iii) Seller or MHSI has not
performed any of the covenants the Seller or MHSI is required to perform between
the Execution Date and the Closing Date under this Agreement or any other
Transaction Document, or there is a material breach of a representation and
warranty set forth in Section 3.3(p) and such failure or breach, in the written
opinion of Chadbourne & Parke LLP (or other nationally recognized tax counsel)
should have a materially adverse effect on Buyer's ability to claim Tax Credits,
or (iv) the Private Letter Ruling contains (or fails to contain) language the
presence (or absence) of which in the written opinion of Chadbourne & Parke LLP
(or other nationally recognized tax counsel) should have a materially adverse
effect on Buyer's ability to claim Tax Credits or (v) there shall be revealed or
there shall have occurred a circumstance or an event that, in Buyer's reasonable
judgment, results in, or at the Closing Date would result in (A) a material
breach of a representation and warranty set forth in Section 3.3(i), (B) a
breach of a representation and warranty set forth in Section 3.1(b) of this
Agreement, (C) a tort claim against the Operating Company that could reasonably
be expected to result in a liability to the Operating Company in excess of $5
million or (D) a casualty to any of the Facilities that has a material adverse
effect on the capacity of the Facilities to produce synthetic fuel qualifying
for Tax Credits, and in any such case (A)-(D), Seller and MHSI have not, within
ninety (90) days of such revelation or occurrence, cured or corrected such
circumstance or event.

                (d)     On the Closing Date, Seller and MHSI each shall deliver
to Buyer an officer's certificate of an Authorized Officer certifying that each
of the representations and warranties set forth in Sections 3.1, 3.2 and 3.3 of
this Agreement is true and correct in all material respects as of the Closing
Date; provided that if MHSI is not able to deliver such certificate, Buyer shall
not be obligated to consummate the Closing only if the circumstances preventing
the delivery of such certificate should in the written opinion of Chadbourne &
Parke LLP (or other nationally recognized tax counsel) have a materially adverse
effect on Buyer's ability to claim Tax Credits.

                                        9

<PAGE>

                (e)     On the Closing Date, Seller shall deliver to Buyer a
bring-down opinion of internal and outside counsels to MHSI and Seller
addressing the matters set forth in Section 2.10(b)(ii), (iii) and (iv), which
opinions shall be in form and substance satisfactory to Buyer.

        2.10    Actions to Occur on the Execution Date.

                (a)     On the Execution Date, Buyer shall deliver or cause to
be delivered to Seller the following:

                        (i)     a certificate of incumbency from the secretary
or an assistant secretary of Buyer as to the officers of Buyer who sign the
Transaction Documents on behalf of Buyer; and a certificate of incumbency from
the secretary or assistant secretary of Buyer Parent as to the officers of Buyer
Parent who sign the Buyer Guaranty on behalf of Buyer Parent;

                        (ii)    a legal opinion of internal counsel to Buyer, in
form and substance satisfactory to Seller, to the effect that (1) each of the
Buyer and the Buyer Parent has been duly formed and is validly existing and in
good standing under the laws of the jurisdiction in which such corporation or
legal entity was formed; (2) each of the Buyer and Buyer Parent has all entity
power and authority to enter into and perform the transactions contemplated by
the Transaction Documents; (3) each of the Transaction Documents to which Buyer
and Buyer Parent is a party has been authorized by all necessary entity action
and has been duly executed and delivered by such entity, and (4) the execution
and delivery of the Transaction Documents to which Buyer and Buyer Parent are a
party do not and will not violate such entity's constitutive documents;

                        (iii)   a legal opinion of Chadbourne & Parke LLP,
outside counsel to Buyer, in form and substance satisfactory to Seller, to the
effect that (1) each of the Transaction Documents to which Buyer and Buyer
Parent is a party constitutes the valid and binding obligation of such entity
enforceable against such entity in accordance with its terms, except as may be
limited or otherwise affected by (I) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws affecting the rights of
creditors generally and (II) principles of equity, whether considered at law or
in equity; and (2) no filing with, notice to, or consent, approval,
authorization or order of any court or government agency or body or official is
required by federal or applicable state law to be obtained in connection with
the execution, delivery and performance by Buyer or the Buyer Parent of the
Transaction Documents to which it is a party.

                        (iv)    the Buyer Parent Guarantee, duly executed by
Buyer Parent;

                        (v)     the Buyer Security Agreement, duly executed by
Buyer;

                        (vi)    the Amended LLC Agreement, duly executed by
Buyer;

                        (vii)   the Assignment Agreement, duly executed by
Buyer; and

                        (viii)  the Base Note, duly executed by Buyer.

                                       10

<PAGE>

                (b)     On the Execution Date, Seller shall deliver or cause to
be delivered to Buyer the following:

                        (i)     a certificate of incumbency from the secretary
or assistant secretary of Seller as to the officers of Seller who sign the
Transaction Documents on behalf of such Seller; and a certificate of incumbency
from the secretary or an assistant secretary of Seller Parent as to the officers
of Seller Parent who sign the Seller Parent Guaranty on behalf of Seller Parent;
and a certificate of incumbency from the secretary or an assistant secretary of
MHSI as to the officers of MHSI who sign the Transaction Documents on behalf of
MHSI;

                        (ii)    a legal opinion of internal counsel to MHSI and
Seller Parent, in form and substance satisfactory to Buyer, to the effect that
(1) each of MHSI and the Seller Parent has been duly formed and is validly
existing and in good standing under the laws of the jurisdiction in which such
corporation or legal entity was formed; (2) each of MHSI and the Seller Parent
has all entity power and authority to enter into and perform the transactions
contemplated by the Transaction Documents to which it is a party; (3) each of
the Transaction Documents to which MHSI or the Seller Parent is a party has been
authorized by all necessary entity action and has been duly executed and
delivered by such entity; and (4) the execution and delivery of the Transaction
Documents to which MHSI and Seller Parent are a party do not and will not
violate such entity's constitutive documents.

                        (iii)   a legal opinion of Stoel Rives LLP, in form and
substance satisfactory to Buyer, to the effect that (1) Seller has been duly
formed and is validly existing and in good standing under the laws of the State
of Oregon; (2) Seller has all entity power and authority to enter into and
perform the transactions contemplated by the Transaction Documents to which it
is a party; (3) each of the Transaction Documents to which Seller is a party has
been authorized by all necessary entity action and has been duly executed and
delivered by such entity; (4) the execution and delivery of the Transaction
Documents to which Seller is a party do not and will not violate Seller's
constitutive documents; and (5) Seller was retroactively reinstated under Oregon
law on December 16, 2002 and the Company was retroactively reinstated under
Oregon law on December 18, 2002.

                        (iv)    a legal opinion of Jones Day, outside counsel to
MHSI, Operating Company and Seller, in form and substance satisfactory to Buyer,
to the effect that (1) the Operating Company has been duly formed in Delaware
and is validly existing and in good standing under the laws of Delaware; (2) the
Operating Company has all limited liability company power and authority to enter
into and perform the transactions contemplated by the Transaction Documents to
which it is a party; (3) each of the Transaction Documents to which Seller, the
Operating Company, MHSI or the Seller Parent is a party constitutes the valid
and binding obligation of such entity enforceable against such entity in
accordance with its terms, except as may be limited or otherwise affected by (I)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other laws affecting the rights of creditors generally and (II) principles of
equity, whether considered at law or in equity; and (4) no filing with, notice
to, or consent, approval, authorization or order of any court or government
agency or body or official is required by federal or applicable state law to be
obtained in connection with the execution, delivery and performance by Seller,
the Operating Company, MHSI or the Seller Parent of the Transaction Documents to
which it is a party;

                                       11

<PAGE>

                        (v)     all consents, waivers or approvals required to
be obtained by Seller with respect to the sale of the Membership Interest by
Seller contemplated herein and the consummation of the transactions related to
such sale of Membership Interest;

                        (vi)    an affidavit of nonforeign status that complies
with Section 1445 of the Code, duly executed by Seller;

                        (vii)   the Amended LLC Agreement, duly executed by
Seller and MHSI;

                        (viii)  the Assignment Agreement, duly executed by
Seller;

                        (ix)    the Seller Guarantee, duly executed by Seller
Parent in favor of Buyer; and

                        (x)     the Seller Security Agreement, duly executed by
MHSI.

        2.11    First Quarterly Payment Date. For purposes of the Fixed Deferred
Payments it is assumed that the first Quarterly Payment Date following the
Closing Date will be the Quarterly Payment Date in respect of the Quarter ending
August 31, 2003. If this assumption turns out to be incorrect, the payment
schedule for the Fixed Deferred Payments shall be adjusted to reflect that.

                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

        3.1     Representations and Warranties Regarding Seller, MHSI and the
Operating Company. Seller and MHSI represent and warrant to Buyer both as of the
Execution Date and the Closing Date as follows (with the understanding that
Buyer is relying on such representations and warranties in entering into and
performing this Agreement):

                (a)     Organization, Good Standing, Etc. (i) each of Seller and
MHSI is a corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation, and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted; (ii) the Operating Company is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all requisite limited liability
company power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. The Operating Company is qualified
to do business and in good standing under the laws of each jurisdiction in which
the character of the Subject Assets owned or leased by that company or the
nature of the activities conducted by it in operating its businesses makes such
qualification necessary under law. Attached hereto as Schedule 3.1(a) are
complete and correct copies of the certificate of formation and the limited
liability company operating agreement of the Operating Company, and all
amendments thereto.

                (b)     Ownership. Seller and MHSI are members of the Operating
Company, with Seller owning 49.9 percent of all of the outstanding membership
interests of the Operating Company and MHSI owning 50 percent of all of the
outstanding membership interests of the Operating Company. Except with respect
to the transactions contemplated by this Agreement

                                       12

<PAGE>

and the SynAmerica I Purchase Agreement, Seller is not a party to any agreement,
arrangement or understanding relating to the sale or disposition of all or any
part of the membership interest of the Operating Company or the sale or
disposition of all or any part of the membership interests in Seller as of the
date hereof, nor is Seller in discussions with any Person with respect to the
foregoing. On the date hereof Seller has, and immediately prior to the Closing
of this Agreement Seller will have, absolute record and beneficial ownership and
title to a 49.9 percent membership interest in the Operating Company free and
clear of any liens or other encumbrances except for the obligations imposed on
members of the Operating Company under its operating agreement. There are no
outstanding options, warrants, calls, puts, convertible securities or other
contracts of any nature to which the Operating Company is bound obligating it to
issue, deliver or sell, or cause to be issued, delivered or sold, membership
interests or any securities or obligations convertible into or exchangeable for
membership interests or to grant, extend or enter into any such option, warrant,
call, put, convertible security or other contract.

                (c)     Subsidiaries, Etc. The Operating Company has no direct
or indirect ownership interest in any corporation, limited liability company,
partnership, joint venture or other firm or entity nor any contractual
obligation or commitment to make any investment in (by way of contributions,
advances, loans or otherwise) to any other Person or to provide guarantees of,
or credit support relating to any third-party debt.

                (d)     Authority. Each of Seller and MHSI has all requisite
corporate power and authority to enter into this Agreement and the other
Transaction Documents to which it is a party, to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
or thereby. The execution and delivery by each of Seller and MHSI of this
Agreement and the Transaction Documents to which it is a party, the performance
by it of its obligations hereunder and thereunder, and the consummation by it of
the transactions contemplated hereby or thereby, have been duly authorized by
all necessary corporate action on the part of Seller and MHSI. This Agreement
has been duly executed and delivered by each of Seller and MHSI, and upon the
execution and delivery by it of the other Transaction Documents to which it is a
party, the Transaction Documents will be duly executed and delivered by Seller
and MHSI. This Agreement (assuming due authorization, execution and delivery by
Buyer) constitutes, and upon execution and delivery by each of Seller and MHSI
of the other Transactions Documents to which it is a party, the Transaction
Documents will constitute, the valid and binding obligations of each of Seller
and MHSI, enforceable against it in accordance with their terms, subject as to
enforceability to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting enforcement of creditors' rights and remedies
generally and to general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).

                (e)     No Conflict; Required Filings and Consents. The
execution and delivery by each of Seller and MHSI of this Agreement and the
other Transaction Documents to which it is a party do not, the performance by it
of its obligations hereunder and thereunder, and the consummation by it of the
transactions contemplated hereby or thereby will not, (i) violate, conflict
with, or result in any breach of any provision of its or the Operating Company's
certificate of formation, articles of incorporation, articles of organization,
bylaws, limited liability company operating agreement or other organizational
documents, (ii) violate, conflict with, or result in a violation or breach of,
or constitute a default (with or without due notice or

                                       13

<PAGE>

lapse of time or both) under, or permit the termination of, or result in the
acceleration of, or entitle any Person to accelerate any obligation, or result
in the loss of any benefit, or give any Person the right to require any security
to be repurchased, or give rise to the creation of any Lien upon the Membership
Interest or any Subject Asset, or affect its or the Operating Company's rights
under any of the terms, conditions, or provisions of any loan or credit
agreement, note, bond, mortgage, indenture, or deed of trust, or any license,
lease, agreement, or other instrument or obligation to which such entity is a
party or by which or to which it or the Operating Company or any of their
respective assets, the Membership Interest or the Subject Assets may be bound or
subject, or (iii) violate any Applicable Law. Except as disclosed on Schedule
3.1(e), no Consent of any Governmental Authority or other Person is necessary or
required with respect to Seller, MHSI or the Operating Company in connection
with the execution and delivery by Seller and MHSI of this Agreement or any of
the other Transaction Documents to which Seller or MHSI is a party, the
performance by Seller or MHSI of its obligations hereunder and thereunder, or
the consummation by Seller or MHSI of the transactions contemplated hereby or
thereby, except for any such Consent that is routine or ministerial in nature.

                (f)     Absence of Litigation. There is no claim, action, suit,
inquiry, judicial or administrative proceeding, grievance, or arbitration
pending or, to the Knowledge of Marriott, threatened against any Seller Party
that seeks to restrain, prohibit, or otherwise enjoin this Agreement or the
consummation of the transactions contemplated hereby.

                (g)     Broker's Fees. Except for broker's fees to be paid by
MHSI to Meridian Investments, Inc., a Massachusetts corporation, no agent,
broker, investment banker, or other Person engaged by any Seller Party is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee payable by Buyer or the Operating Company in connection with any of
the transactions contemplated by this Agreement.

        3.2     Representations and Warranties Regarding the Operating Companies
- Historical. Attached hereto as Schedule 3.2 are the "Representations and
Warranties Regarding the Companies" that PacifiCorp made to Marriott in Section
3.2 of the PacifiCorp/Marriott Agreement (the "Historical Representations and
Warranties"). For the period up to October 15, 2001 (but not thereafter), Seller
and MHSI hereby repeat and incorporate herein by this reference as
representations and warranties of Seller and MHSI both as of the Execution Date
and the Closing Date the Historical Representations and Warranties. The sole
liability of Seller and MHSI with respect to this Section 3.2 is as set forth in
Section 7.10 hereof.

        3.3     Representations and Warranties Regarding the Operating Company.
The representations and warranties set forth in this Section 3.3 and the
Schedules with respect thereto have effect only for, and relate only to, the
period commencing October 15, 2001.

                Seller and MHSI represent and warrant to Buyer both as of the
Execution Date and the Closing Date as follows (with the understanding that
Buyer is relying on such representations and warranties in entering into and
performing this Agreement):

                (a)     Financial Statements; Undisclosed Liabilities; Absence
of Certain Changes or Events.

                                       14

<PAGE>

                        (i)     Attached as Exhibit J is the balance sheet of
        the Operating Company as of November 29, 2002 (the "Balance Sheet"), and
        the statements of income of the Operating Company for the fiscal year to
        such date (such financial statements collectively referred to as the
        "Financial Statements"). The Financial Statements have been prepared in
        accordance with GAAP and fairly present the information purported to be
        presented therein as of such date and for the periods to such date.

                        (ii)    There is no liability or obligation of any kind,
        whether accrued, absolute, fixed, contingent (as such term is defined
        under FASB Statements of Financial Accounting Standards No. 5), or
        otherwise, of the Operating Company for the period since October 15,
        2001 that is not disclosed or reserved against in the Balance Sheet as
        of November 29, 2002 (the "Balance Sheet Date"), other than liabilities
        and obligations incurred in the Ordinary Course of Business since the
        Balance Sheet Date that do not impose any material liability on the
        Operating Company. No facts or circumstances exist that, with or without
        the passing of time or the giving of notice or both, might reasonably
        serve as the basis for any such liabilities not covered by the exception
        in the foregoing sentence.

                        (iii)   Since the Balance Sheet Date, the Operating
        Company has conducted its business only in the Ordinary Course of
        Business. Since the Balance Sheet Date, no material adverse change has
        occurred to the business, the assets or the financial condition or
        prospects of the Operating Company. As of the date hereof, the Operating
        Company does not have any liabilities of any nature, whether accrued,
        absolute, contingent or otherwise (including, without limitation,
        liabilities as guarantor or otherwise with respect to obligation of
        others, or liabilities for taxes due or then accrued or to become due or
        contingent or potential liabilities relating to activities of the
        Company or the conduct of its business) (collectively "Liabilities"),
        except: (i) Liabilities reflected in the Financial Statements, (ii)
        Liabilities incurred in the ordinary course of business of the Company
        since the Balance Sheet Date which singly or in the aggregate do not
        have a Material Adverse Effect on the condition (financial or
        otherwise), properties, assets, liabilities, business or operations of
        the Company, and (iii) as set forth on Schedule 3.3(a) attached hereto.

                (b)     Compliance with Applicable Laws; Permits. Except as
regards Taxes, which are the subject of Section 3.3(j), since October 15, 2001,
the Operating Company has complied in all material respects with, the Operating
Company has not received any notices of any violation of, and the Subject Assets
of the Operating Company have been in compliance in all material respects with,
all Applicable Laws. Except as listed on Schedule 3.3(b) there are no material
permits, approvals, registrations, licenses, legal notifications,
authorizations, exemptions or the like ("Permits") required to be obtained or
filed by the Operating Company under any Applicable Law either to conduct the
business of the Operating Company or otherwise to own or operate the Facilities
or the other Subject Assets. All Permits owned or held by the Operating Company
to conduct its businesses or otherwise to own and operate the Facilities and the
other Subject Assets are listed or described on Schedule 3.3(b). All such
Permits are in full force and effect, the Operating Company is and has been in
compliance in all material respects with such Permits, and, to the Operating
Company's Knowledge, there are no conditions which, with the

                                       15

<PAGE>

passage of time or the giving of notice or both, would give rise to a material
breach or default by the Operating Company under any thereof.

                (c)     Absence of Litigation. Since October 15, 2001, except as
set forth on Schedule 3.3(c) there is no claim, action, suit, inquiry, judicial,
or administrative proceeding, grievance, or arbitration that has been formally
asserted or filed or, to the Knowledge of Marriott, threatened against the
Operating Company or any of the Subject Assets or that questions the validity of
the Transaction Documents or that seeks to delay, prevent or alter the
consummation of any of the transactions contemplated hereby and thereby; nor
have there been any investigations relating to the Operating Company or any of
the Subject Assets that have been formally advised to the Operating Company or,
to the Knowledge of Marriott, threatened by any Governmental Authority. Since
October 15, 2001, there are no claims, actions or suits that have been filed by
the Operating Company. Since October 15, 2001, there is no judgment, decree,
injunction, order, determination, award, notice of violation, finding, or letter
of deficiency of any Governmental Authority or arbitrator that has become
outstanding against the Operating Company or any of the Subject Assets.

                (d)     Insurance. Since October 15, 2001, the Operating Company
has been insured against such risks and in such amounts as companies engaged in
a similar business would, in accordance with good business practice, customarily
be insured. Schedule 3.3(d) sets forth a list of all fire, general liability,
malpractice liability, theft, and other forms of insurance and all fidelity and
surety bonds held by or applicable to the Operating Company or the Subject
Assets for the period since October 15, 2001, and except as disclosed on such
Schedule 3.3(d), for the period since October 15, 2001, there is no claim by the
Operating Company pending under any such policies or bonds as to which coverage
has been questioned, denied, or disputed by the underwriters of such policies or
bonds. All premiums due and payable under such policies and bonds since October
15, 2001 have been paid, and except as set forth on Schedule 3.3(d) the
Operating Company is otherwise in compliance in all material respects with the
terms and conditions of such policies and bonds. Since October 15, 2001, no
event has occurred, including the failure by the Operating Company to give any
notice or information or the delivery of any inaccurate or erroneous notice or
information, which materially limits or impairs the rights of the Operating
Company under any such insurance policies. Excluding insurance policies that
have expired and been replaced in the Ordinary Course of Business, except as set
forth on Schedule 3.3(d), no insurance policy held by or applicable to the
Operating Company or the Subject Assets of the Operating Company has been
canceled since October 15, 2001 and, to the Knowledge of Marriott, there is no
threatened termination of such policies and, except as noted on Schedule 3.3(d),
since October 15, 2001, the Operating Company has not received any notice of any
premium increase with respect to such policies. With respect to any period since
October 15, 2001 during which any third-party operator provided material
operational and/or maintenance services to the Facilities, to the Knowledge of
Marriott, such third-party operator acquired or otherwise maintained workmen's
compensation and liability insurance coverage in such amounts as third-party
operators engaged in a similar business would, in accordance with good business
practices, customarily be insured.

                (e)     Owned Real Property. The Operating Company does not own
any real property.

                                       16

<PAGE>

                (f)     Leased Real Property. The Operating Company currently
does not lease or sublease any real property, including any real property
leasehold interests covering office space or industrial sites, other than the
real property leasehold interests described on Schedule 3.3(f). Except as set
forth on Schedule 3.3(f), there is no real property owned or leased by Seller
Parent or one of its Affiliates (other than the Operating Company or SynAmerica
I) that is used or held for use primarily in connection with the Facilities or
the operations of the Operating Company. Each lease listed on Schedule 3.3(f),
if any, is in full force and effect without any amendment. The Operating Company
is not, and, to the Knowledge of Marriott, no other Person is, in default under
any lease listed on Schedule 3.3(f), if any, that could reasonably be expected
to have a Material Adverse Effect. No Consent from any landlord or third party
to any lease listed on Schedule 3.3(f), will be required as a result of the
execution, delivery or performance by the Parties of this Agreement and the
other Transaction Documents. All leasehold interests listed on Schedule 3.3(f)
are available for immediate use as related to the Facilities and the operations
of the Operating Company as currently conducted or as otherwise conducted in the
Ordinary Course of Business, and such leasehold interests listed on Schedule
3.3(f) are adequate for the Operating Company to operate in accordance with its
operations as currently conducted or as otherwise conducted in the Ordinary
Course of Business. Since October 15, 2001, the Operating Company has not
purchased or leased any additional real property. Seller has delivered to Buyer
true and complete copies of all leases listed in Schedule 3.3(f), if any, and
all amendments thereto, prior to the execution of this Agreement. Each such
lease is valid and binding on the Operating Company and, to the Knowledge of
Marriott, on the other parties thereto, and is enforceable in accordance with
the terms thereof, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, applicable equitable principles or other
similar laws affecting the enforcement of creditors' rights generally.

                (g)     Personal Property. Schedule 3.3(g) contains a list of
the items of Personal Property having a replacement cost of not less than
$10,000 for each item acquired by the Operating Company since October 15, 2001,
and not since disposed of in the Ordinary Course of Business. Except as set
forth in Schedule 3.3(g), there is no personal property owned or leased by
Seller Guarantor or one of its Affiliates (other than the Operating Company or
SynAmerica I) that has become used or held for use primarily in connection with
the Facilities or the operations of the Operating Company since October 15,
2001. All Personal Property listed on Schedule 3.3(g) is located at the
locations listed on such Schedule 3.3(g). Except as set forth on Schedule
3.3(g), the Operating Company has good and marketable title to, or a valid
leasehold or license interest in, all of the Personal Property listed on such
Schedule. The Operating Company is not, and, to the Knowledge of Marriott, no
other Person is, in default under any of the leases, licenses and other
Contracts relating to the Personal Property listed on such Schedule that could
reasonably be expected to have a Material Adverse Effect. Except as otherwise
disclosed in Schedule 3.3(g), the Personal Property listed on such Schedule (i)
is in good operating condition and repair (ordinary wear and tear excepted),
(ii) is available for immediate use in the operations of the Operating Company
as and where currently conducted, and (iii) is adequate for the Operating
Company to operate in accordance with its operations as and where currently
conducted or as otherwise conducted in the Ordinary Course of Business.

                (h)     Liens. All of the Subject Assets are free and clear of
all liens, pledges, claims, security interests, restrictions, mortgages, deeds
of trust, tenancies, and other possessory interests, conditional sale or other
title retention agreements, assessments, easements, rights of

                                       17

<PAGE>

way, covenants, restrictions, rights of first refusal, defects in title,
encroachments, and other burdens, options or encumbrances of any kind
(collectively, "Liens") except for Permitted Liens.

                (i)     Environmental Matters.

                        (i)     Except as set forth on Schedule 3.3(i)(i), the
        Operating Company, the operations of the Operating Company, and the
        Subject Assets have at all times since October 15, 2001 complied with
        all Environmental Laws, and currently comply with all Environmental
        Laws.

                        (ii)    Since October 15, 2001, except as set forth on
        Schedule 3.3(i)(ii), no judicial or administrative proceedings have been
        filed or, to the Knowledge of Marriott, threatened against the Operating
        Company alleging the violation of any Environmental Laws, or alleging
        any liabilities arising under any Environmental Laws, or otherwise
        requiring the Operating Company to take, or refrain from taking, any
        action in order to comply with any Environmental Laws, and no claims,
        actions or suits have been formally asserted or filed or, to the
        Knowledge of Seller or MHSI, threatened against the Operating Company
        from or related to exposure (or alleged exposure) of Persons or property
        to Hazardous Substances in connection with the operation of the
        Operating Company or the Facilities, and no notice from any Governmental
        Authority or any private or public Person has been received by the
        Operating Company or any other Seller Party or, to the Knowledge of
        Marriott, threatened against the Operating Company or any other Seller
        Party claiming any violation of any Environmental Laws by the Operating
        Company in connection with any real property or facility owned, operated
        or leased by the Operating Company, or claiming any liabilities arising
        under Environmental Laws or requiring any investigation, remediation, or
        monitoring on or in connection with any real property or facility owned,
        operated or leased by the Operating Company or any offsite location that
        may have been impacted by operations of the Operating Company that are
        necessary to comply with any Environmental Laws and that have not been
        fully complied with or otherwise resolved to the full satisfaction of
        the Person giving notice, or that otherwise may reasonably be expected
        to give rise to any liability arising under Environmental Laws.

                        (iii)   Since October 15, 2001, except as set forth on
        Schedule 3.3(i)(iii), the Operating Company possesses, has possessed or
        otherwise holds or has held all Permits required to conduct all of its
        activities, including those activities relating to the generation, use,
        storage, treatment, transport, disposal, release, investigation,
        remediation or monitoring of Hazardous Substances. All such Permits are
        final, in full force and effect, and are not subject to any judicial or
        administrative appeal or other proceedings.

                        (iv)    Since October 15, 2001, all Hazardous Substances
        generated, used, stored, treated, transported, disposed of, arranged for
        transport, arranged for disposal or released (collectively, "Managed")
        by the Operating Company on, in, under or from any of its owned,
        operated, or leased real property or facilities have been Managed by the
        Operating Company in such manner as to be in compliance with
        Environmental Law and not to result in any Environmental Costs or
        Liabilities. To the Knowledge of Marriott, no

                                       18

<PAGE>

        Hazardous Substances exist in or on the Subject Assets except in
        compliance in all material respects with Environmental Laws.

                        (v)     Since October 15, 2001, neither the Operating
        Company nor other Seller Party has received any written notification
        from any source advising the Operating Company or Seller Party that: (A)
        the Operating Company is a potentially responsible party under CERCLA or
        any other Environmental Laws; (B) any real property or facility
        currently or previously owned, operated or leased by the Operating
        Company is identified or proposed for listing as a federal National
        Priorities List ("NPL") (or state-equivalent) site or a Comprehensive
        Environmental Response, Compensation and Liability Information System
        ("CERCLIS") (or state-equivalent) site; and (C) any facility to which
        the Operating Company has ever transported, disposed or otherwise
        arranged for the transport or disposal of Hazardous Substances is
        identified or proposed for listing as an NPL (or state-equivalent) site
        or CERCLIS (or state-equivalent) site.

                        (vi)    Since October 15, 2001, no Hazardous Substance
        has been released or been present in a reportable quantity or quantity
        potentially requiring remedial action or warranting environmental
        investigation, or that could otherwise reasonably be expected to result
        in liability at, on, or under any real property or facility now or
        previously owned, operated or leased by the Operating Company.

                        (vii)   The Operating Company has made available to
        Buyer all environmental site assessment reports, studies, and related
        documents in its possession and relating to the operation, businesses
        and property of the Operating Company and the Facilities.

                (j)     Taxes. The Operating Company has timely filed, or caused
to be timely filed on its behalf, all Tax Returns required to be filed since
October 15, 2001, and has paid, or caused to be paid on its behalf, all Taxes
required to be paid since October 15, 2001. All such Tax Returns are complete
and accurate in all material respects. Waivers of the statute of limitations in
respect of Taxes for which the Operating Company is liable that have been given
to the IRS are listed on Schedule 3.3(j). To Marriott's Knowledge, no other such
waivers have been given or requested.

                (k)     Company Contracts. Schedule 3.3(k) lists all material
(i) lease agreements, easements, right-of-way agreements, partnership, joint
venture or alliance agreements, agreements under which any indebtedness for
borrowed money has been created, incurred, assumed or guaranteed, agreements
with Sellers or any Affiliate of Seller (other than the Operating Company or
SynAmerica I), non-compete agreements, stock option, stock purchase, severance
and similar agreements, employment agreements, collective bargaining agreements,
license agreements, asset purchase agreements, merger agreements, operation and
maintenance agreements, engineering, procurement and construction agreements,
fuel supply agreements, fuel sales agreements, and loan agreements entered into
since October 15, 2001, to which the Operating Company is a party, and (ii) all
other agreements entered into since October 15, 2001 to which the Operating
Company is a party involving payments to, or a liability of, the Operating
Company in excess of $10,000, in each case (A) which agreements are currently in
effect and (B) with respect to such agreements, the Operating Company is a party
thereto or such

                                       19

<PAGE>

agreements bind or are included in the Subject Assets of the Operating Company.
Seller has delivered or made available to Buyer a complete and correct copy of
each such contract or other agreement listed on Schedule 3.3(k) (including all
exhibits and schedules thereto) as in effect on the date hereof. With respect to
each such agreement: (A) the agreement is in full force and effect, valid and
binding on the Operating Company, and, to the Knowledge of Marriott, on the
other parties thereto, and is enforceable in accordance with the terms thereof,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, applicable equitable principles or other similar
laws affecting the enforcement of creditors' rights generally; (B) the agreement
will continue to be in full force and effect on identical terms following the
Closing; (C) the Operating Company is not and, to the Knowledge of Marriott, no
other party under such agreement is, in breach or default, and no event or
circumstance has occurred or exists with respect to the Operating Company or, to
the Knowledge of Marriott, with respect to the other party to such agreement,
which with notice or lapse of time would constitute a breach or default, or
permit termination, modification, or acceleration, under the agreement, in each
case that could reasonably be expected be have a Material Adverse Effect; (D) to
the Knowledge of Marriott, no other party to such agreement has any valid
defense, setoff or counterclaim against the Operating Company under any such
agreement and the Operating Company or any other Seller Party has not received
any notice of any such claim; and (E) the Operating Company has not repudiated
and, except as disclosed on Schedule 3.3(k), does not intend to terminate,
cancel or not renew any provisions of such agreement, and, to Marriott's
Knowledge, no other party to such agreement has repudiated or intends to
terminate, cancel or not renew any provision of such agreement.

                (l)     Employee Matters.

                        (i)     The Operating Company has no employees. Except
as set forth on Schedule 3.3(l), there is not any collective bargaining or
similar agreement with any labor organization relating to the individuals who
currently provide or, since October 15, 2001, have provided services in
connection with the operation of the Facilities including, without limitation,
the delivery of coal feedstock (the "Facility Employees"). None of the Facility
Employees is a common law employee of the Operating Company. With respect to the
Operating Company and Synfuel Management, LLC, Marriott has no Knowledge of,
after due inquiry with Synfuel Management, LLC, (A) any current or planned
employee union or organizing activities; (B) any current or threatened strike,
dispute, slowdown, stoppage or lockout; (C) any unfair labor practice charge or
complaint by any Facility Employee pending before the National Labor Relations
Board or any similar state agency; (D) any charge or investigation pending
before the Equal Employment Opportunity Commission or any other federal or state
entity responsible for the prevention of unlawful employment practices; or (E)
except as disclosed on Schedule 3.3(l)(i), any material violation or notices of
violations of MSHA.

                        (ii)    Since October 15, 2001, the Operating Company
has not maintained, sponsored, administered or participated in any employee
benefit plan, program or arrangement, including without limitation any employee
benefit plan subject to ERISA. To the Knowledge of Marriott the Operating
Company has no outstanding or threatened liability relating to any employee
benefit plan that it maintained, sponsored or administered, or in which it
participated prior to October 15, 2001.

                                       20

<PAGE>

                (m)     Intellectual Property.

                        (i)     Other than the licenses listed on Schedule
3.3(k), the Company does not own or hold under license any material Intellectual
Property.

                        (ii)    Since October 15, 2001, the Operating Company
has not unlawfully interfered with, infringed upon or misappropriated any
Intellectual Property rights of third parties and no third party has unlawfully
interfered with, infringed upon, or misappropriated any Intellectual Property
rights of the Operating Company, except in any such case as could not reasonably
be expected to have a Material Adverse Effect.

                (n)     Powers of Attorney. There are no outstanding powers of
attorney executed by or on behalf of the Operating Company since October 15,
2001.

                (o)     Affiliate Transactions. There are no contracts between
the Operating Company and any other Affiliate of Seller or MHSI.

                (p)     Section 29.

                        (i)     Except as disclosed in the Marston Report or on
Schedule 3.3(p)(i), no material change or modification has been made to the
equipment at the Facilities since October 15, 2001.

                        (ii)    To Marriott's Knowledge, there is no material
misstatement of fact or any material omission of fact in the Request that would
permit the IRS to revoke any of the rulings in the Private Letter Ruling or to
successfully assert in a revenue agent's report or notice of proposed
disallowance that any such ruling does not apply to the Operating Company or
Buyer.

                        (iii)   To Marriott's Knowledge, there is no material
misrepresentation in Section 3.2(k) of the PacifiCorp/Marriott Agreement, or any
material misstatement of fact or material omission of fact in earlier ruling
requests, which would permit the IRS to revoke the earlier IRS letter rulings
issued with respect to the Facilities and the Operating Company or to
successfully assert in a revenue agent's report or notice of proposed
disallowance that any such ruling does not apply to the Operating Company.

                        (iv)    At least 20% of the current fair market value of
the Facilities is attributable to used property (within the meaning of the
private ruling issued to the Operating Company in 1997) retained from the
Facilities at their original sites in Jefferson, Tuscaloosa and Walker Counties,
Alabama.

                        (v)     The Operating Company is classified as a
partnership for federal income tax purposes and not as an association taxable as
a corporation.

                        (vi)    IRS audits of the Operating Company commenced in
January 2000. The Operating Company received the information document requests
from the IRS set forth on Schedule 3.3(p)(vii) and has responded to certain of
these requests, but to Marriott's Knowledge there has been no other written
communication with the IRS about the audit. For

                                       21

<PAGE>

tactical reasons, all contact with the IRS through the end of 2002 has been by
PacifiCorp personnel and not by Marriott or its counsel, and accordingly
Marriott's knowledge of the audits is limited. To Marriott's Knowledge, the IRS
has not indicated an intention to disallow tax credits claimed by PacifiCorp or
advanced any particular theory for such a disallowance.

For purposes of any indemnity relating to, or claim of breach with respect to,
the representations in subsections 3.3(p)(ii) or (iii), Marriott shall not be
treated as having Knowledge of any misstatement, omission or misrepresentation,
and the representations in such subsections shall not be treated as incorrect or
breached, to the extent that the relevant facts were disclosed to Buyer or its
counsel in writing or through documents provided as part of Buyer's due
diligence. For the avoidance of doubt, the parties acknowledge that the items
listed on Schedule 3.3(p)(iv)B were provided to Buyer's counsel in the course of
due diligence. In addition, in the absence of fraud (a remedy which is provided
for in Section 7.1 hereof), the parties acknowledge that Marriott shall not have
Knowledge of any additional facts if such facts are included in the Excluded
Boxes described on Schedule 3.3(p)(iv)A and are not otherwise known to Marriott.

        3.4     Updating of Schedules. For purposes of the representations and
warranties of Seller and MHSI to be made on the Closing Date pursuant to
Sections 3.1, 3.2 and 3.3, the schedules to such representations and warranties
shall be updated through the Closing Date. Buyer shall not be obligated to
consummate the Closing if the schedules, as updated, should in the written
opinion of Chadbourne & Parke LLP (or other nationally recognized tax counsel)
have a materially adverse effect on Buyer's ability to claim Tax Credits.

        3.5     Application of Representations and Warranties to 0.1% Interest.
Seller and MHSI agree that the representations and warranties made in Sections
3.2 and 3.3 also are made as of the Closing Date to Buyer and its predecessors
in interest with respect to the 0.1% interest in the Operating Company
previously acquired by Buyer.

        3.6     Representations and Warranties of Buyer. Buyer represents and
warrants to Seller and MHSI both as of the Execution Date and the Closing Date
as follows (with the understanding that Seller and MHSI are relying on such
representations and warranties in entering into and performing this Agreement):

                (a)     Organization; Good Standing; Etc. Buyer is a limited
liability company duly incorporated, validly existing, and in good standing
under the laws of the State of Delaware, and has all requisite corporate power
and authority to own, lease, and operate its properties and to carry on its
business as now being conducted.

                (b)     Authority. Buyer has all requisite power and authority
as a limited liability company to enter into this Agreement and the other
Transaction Documents to which it is a party, to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by Buyer of this Agreement and the other
Transaction Documents to which it is a party, the performance by it of its
obligations hereunder and thereunder, and the consummation by it of the
transactions contemplated hereby or thereby, have been duly authorized by all
necessary limited liability company action on the part of Buyer. This Agreement
has been duly executed and delivered by Buyer, and upon execution and delivery
by it of the other Transaction Documents to which it is a

                                       22

<PAGE>

party, the other Transaction Documents will be duly executed and delivered by
Buyer. This Agreement (assuming due authorization, execution and delivery by
Seller and MHSI) constitutes, and upon execution and delivery by Buyer of the
other Transaction Documents to which it is a party, the other Transaction
Documents will constitute, the valid and binding obligations of Buyer,
enforceable against it in accordance with their terms, subject as to
enforceability to applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting enforcement of creditors' rights and remedies
generally and to general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).

                (c)     No Conflict; Required Filings and Consents. The
execution and delivery by Buyer of this Agreement and the other Transaction
Documents to which it is a party do not, the performance by it of its
obligations hereunder and thereunder, and the consummation by Buyer of the
transactions contemplated hereby or thereby will not (i) violate, conflict with,
or result in any breach of any provisions of its certificate of formation or
limited liability company operating agreement, (ii) violate, conflict with, or
result in a violation or breach of, or constitute a default (with or without due
notice or lapse of time or both) under, or permit the termination of, or result
in the acceleration of, or entitle any Person to accelerate any obligation, or
result in the loss of any benefit, or give any Person the right to require any
security to be repurchased, or give rise to the creation of any Lien upon any of
its assets under, any of the terms, conditions, or provisions of any loan or
credit agreement, note, bond, mortgage, indenture, or deed of trust, or any
license, lease, agreement, or other instrument or obligation to which Buyer is a
party or by which or to which it or any of its assets may be bound or subject,
or (iii) violate any Applicable Law; except in the case of clauses (ii) and
(iii) of this Section 3.4(c) for any such violations, conflicts, breaches,
defaults, rights of termination, cancellation or acceleration, loss of benefits,
repurchase rights, Liens or effects that would not adversely affect the ability
of Buyer to consummate the transactions contemplated by this Agreement. No
Consent of any Governmental Authority is required by or with respect to Buyer in
connection with the execution and delivery by Buyer of this Agreement or any of
the other Transaction Documents to which Buyer is a party, the performance by
Buyer of its obligations hereunder and thereunder, or the consummation by Buyer
of the transactions contemplated hereby or thereby, except for any such Consent
that is routine or ministerial in nature.

                (d)     Absence of Litigation. There is no claim, action, suit,
inquiry, judicial or administrative proceeding, grievance, or arbitration
pending or, to the knowledge of Buyer, threatened against Buyer or any of its
Affiliates that seeks to restrain, prohibit, or otherwise enjoin this Agreement
or the consummation of the transactions contemplated hereby.

                (e)     Broker's Fee. No agent, broker, investment banker, or
other Person engaged by Buyer or any of its Affiliates will be entitled to any
broker's or finder's fee or any other commission or similar fee payable by any
Seller Party in connection with any of the transactions contemplated by this
Agreement.

                                    ARTICLE 4
                                CERTAIN COVENANTS

        4.1     Conduct of Operations. During the period from the Execution Date
to the Closing, Seller and MHSI shall cause the Operating Company to (i) conduct
its operations in the

                                       23

<PAGE>

Ordinary Course of Business (including the paying of all premiums due and
payable under, and the taking of all actions necessary to maintain, all
insurance policies and bonds described in Section 3.3(d)) and in compliance in
all material respects with Applicable Laws (including Environmental Laws), (ii)
cause tests for significant chemical change to be conducted in accordance with
the testing protocol set forth on Schedule 4.1, (iii) not produce during any
Quarter at a level exceeding the Quarterly Maximum Production, (iv) cause the
Facilities to be maintained in good condition and in accordance with Prudent
Operating Standards, (v) cause the Facilities to be operated in all material
respects consistently with the statement of facts in the Request, (vi) not
terminate or amend in any material respect any real property leases and (vii)
not instruct or permit the Manager to replace, change or modify any of the
equipment at the Facilities, except for the following changes: (a) the
replacement of parts with substantially identical parts; (b) the replacement or
addition of electrical components (excluding motor drives), meters, scales,
sampling and testing, programmable logic controller or other measuring equipment
to improve quality control; (c) the replacement of front-end loaders, vehicles
and other similarly mobile equipment (it being agreed that the Facilities
themselves are not "mobile equipment" for this purpose) or (d) the addition,
replacement or modification of equipment for the purpose of safety or
occupational health improvements.

        4.2     Existing Accounts Payable. To the extent not funded prior to the
Closing Date, MHSI shall be responsible for funding working capital requirements
of the Operating Company that relate specifically to accounts payable accruing
prior to the Closing Date.

        4.3     Independent Engineer. MHSI acknowledges that Buyer has engaged
the Independent Engineer to assist it in monitoring its investment in the
Company and compliance with this Agreement and to advise it as to matters
requiring the consent of or Consultation with Buyer hereunder or under the
Amended LLC Agreement. In particular, MHSI acknowledges that the Independent
Engineer may visit the Facilities during normal business hours prior to each
Quarterly Payment Date. MHSI will ask the Manager and Independent Chemist to
cooperate with the Independent Engineer and to provide the Independent Engineer
with reasonable access to all data and personnel to the extent that providing
such access and data is reasonably related to such purposes and does not
materially interfere with the operation of the Facilities or the business and
operations of MHSI or the Company. Additionally, every day during which the
Facilities are operational, MHSI shall ask the Manager to provide the
Independent Engineer a Daily Production Report. MHSI shall also ask the Manager
to provide the Independent Engineer any notices of MSHA violations, corrections
or notices of state or federal inspection at the Facilities that indicate a
deficiency or violation when they are received, as well as any chemical change
reports that do not indicate that the coal feedstock used at the Facilities to
create synthetic fuel underwent a significant chemical change.

                                    ARTICLE 5
                                   TAX MATTERS

        5.1     Tax Returns and Proceedings.

                (a)     MHSI shall cause the Operating Company to prepare and
file all Tax Returns when due and all reports related to the Operating Company
that are required to be filed or furnished with respect to all taxable periods
ending on or before the Closing Date. For taxable

                                       24

<PAGE>

periods ending after the Closing Date, MHSI shall (in its capacity as
Administrative Member) cause all such returns and reports to be filed in
accordance with the Amended LLC Agreement. The parties shall cooperate with
respect to the preparation and filing of all such returns and reports.

                (b)     Subject to any additional obligations or covenants
provided under the Amended LLC Agreement, Buyer, on the one hand, and MHSI, on
the other hand, shall provide the other with such assistance as may reasonably
be requested by the other Party in connection with the preparation of any Tax
Return, any audit or other examination by any taxing authority, or any judicial
or administrative proceedings relating to the liability for any Taxes with
respect to the operations of the Operating Company or the allowance or
disallowance of any Tax Credits arising from the sale by the Operating Company
of solid synthetic fuel produced in the Facilities, and each shall retain (until
the expiration of the applicable statute of limitations) and provide the
requesting Party with any records or information that may be relevant to such
Tax Return, audit or examination or proceedings. Any information obtained under
this section or under any other section hereof providing for the sharing of
information or review of any Tax Return will be kept confidential by the
Parties; provided that such information may be provided to the applicable tax
authorities. Each Party shall provide timely notice to the other in writing of
any pending or threatened Tax audits or assessments of which such Party is aware
relating to the liability for any Taxes with respect to the operations of the
Operating Company or the allowance or disallowance of any Tax Credits arising
from the sale by the Operating Company of solid synthetic fuel produced in the
Facilities.

                (c)     MHSI shall cause the Operating Company to make an
election under Section 754 of the Code for the taxable year of the Operating
Company which includes the sale of the Membership Interest contemplated hereby.

        5.2     Transaction Taxes. Any real property transfer or gains tax,
sales tax, use tax, stamp tax, stock transfer tax or other similar tax,
including any penalties, interest and additions to tax imposed by reason of the
transactions contemplated by this Agreement to occur at the Closing shall be
borne by Seller.

        5.3     Private Letter Ruling.

                (a)     The Parties shall exercise commercially reasonable
efforts to cause the Operating Company to submit the additional ruling request
substantially in the form attached hereto as Exhibit D ("Request") as promptly
as possible following the Execution Date.

                (b)     The Parties shall cause the Company to (i) inform Buyer
and its counsel in a timely manner of all material developments in the private
letter ruling process, including all communications related thereto to and from
the IRS; (ii) provide Buyer and its counsel with a draft copy of any supplements
to the Request (including any exhibits or attachments thereto) and of any other
written communication related thereto proposed to be submitted to the IRS for
its review and comment at least five Business Days prior to submission; (iii)
incorporate all reasonable changes and comments to such supplements as may be
requested by Buyer or its counsel, (iv) provide Buyer and its counsel with
notice reasonably in advance of any meetings or conferences (including
telephonic meetings or conferences) with the IRS with respect to the

                                       25

<PAGE>

Request and arrange with the IRS to permit Buyer and its counsel to participate
in any such meetings or conferences (including signing any necessary IRS forms),
and (v) consult with Buyer and its counsel regarding potential withdrawal of any
parts of the Request on which the IRS indicates it remains adverse after a
conference of right if the IRS indicates that it does not intend to grant the
Private Letter Ruling.

                (c)     The Parties agree that, should either of their
respective tax counsels recommend changes to the Transaction Documents as
required by the IRS to obtain the Private Letter Ruling, the Parties will
cooperate and negotiate in good faith to attempt to reach agreement to amend the
Transaction Documents to the extent necessary to obtain the Private Letter
Ruling.

                                    ARTICLE 6
                                   TERMINATION

        6.1     Termination. Without limiting Seller's, MHSI's or Buyer's
ability to exercise any right or remedy to which it is entitled hereunder or
under any of the Transaction Documents, except as otherwise provided herein,
this Agreement may be terminated as provided in this Section 6.1.

                (a)     If Buyer or Buyer Parent fails to pay in full any
portion of the Purchase Price that is due and payable under Article 2 on the
date such payment is due under Article 2 (such failure not being due to a
deferral of the Fixed Deferred Payment pursuant to Section 2.6 or deferral under
the Base Note), and such failure continues for 20 days after Buyer and Buyer
Parent receive written notice of such failure from MHSI, then MHSI shall have
the option, exercisable by delivery of written notice thereof to Buyer within
180 days following Buyer's receipt of the notice of default so long as such
default is continuing at such time of exercise, to terminate this Agreement and
cause the Membership Interest to be redeemed by the Operating Company. If MHSI
exercises such option, this Agreement shall terminate and (i) Buyer shall
reconvey and transfer to the Operating Company all right, title and interest in
and to the Membership Interest, free and clear of all Liens other than the
obligations and liabilities under Transaction Documents with respect thereto;
(ii) Buyer will be deemed to have made the written representations set forth on
Exhibit D to the Amended LLC Agreement to Seller, MHSI and the Operating
Company; (iii) Buyer shall take all such further actions and execute,
acknowledge and deliver all such further documents that are necessary or useful
to effectuate the transfer of the Membership Interest contemplated by this
Section 6.1(a); (iv) the Operating Company shall effectuate such redemption; (v)
all obligations and liabilities associated with the Membership Interest will
terminate except those obligations and liabilities accrued through the date of
termination or relating to any taxable year or portion thereof prior to such
date; (vi) Buyer will have no further rights as a member of the Operating
Company; (vii) the Amended LLC Agreement shall be amended to reflect Buyer's
resignation as a member of the Operating Company; and (viii) Buyer shall have no
further obligation thereafter to make any Fixed Deferred Payments, Variable
Deferred Payments, payments under the Base Note or contributions to the capital
of the Operating Company pursuant to the Amended LLC Agreement, except those
obligations and liabilities accrued through the date of termination. Relief from
the obligation of Buyer to make such payments will be deemed sufficient
consideration for the reconveyance and transfer of the Membership Interest to
the Operating Company.

                                       26

<PAGE>

                (b)     If Buyer delivers to the Operating Company and to MHSI a
Termination Notice on or before December 31, 2003, then on the Termination Date
(or on December 31, 2003, if MHSI has elected pursuant to Section 2.5(g) to
require Buyer to remain as a partner in the Operating Company until such date),
this Agreement shall terminate and (i) Buyer shall convey and transfer to MHSI
all right, title and interest in and to the Membership Interest free and clear
of all Liens other than the obligations and liabilities under Transaction
Documents with respect thereto; (ii) Buyer will be deemed to have made the
written representations set forth on Exhibit D to the Amended LLC Agreement to
MHSI; (iii) Buyer shall take all such further actions and execute, acknowledge
and deliver all such further documents that are necessary or useful to
effectuate such conveyance and transfer; (iv) all obligations and liabilities of
Buyer associated with the Membership Interest will terminate except those
obligations and liabilities accrued through the date of termination or relating
to any taxable year or portion thereof prior to such date; (v) Buyer will have
no further rights as a member of the Operating Company; (vi) the Amended LLC
Agreement shall be amended to reflect such conveyance and transfer; and (vii)
Buyer shall have no obligation thereafter to make any Fixed Deferred Payments,
Variable Deferred Payments, payments under the Base Note or contributions to the
capital of the Operating Company pursuant to the Amended LLC Agreement, except
those obligations and liabilities accrued through the date of termination.

                (c)     If the Membership Interest held by Buyer is redeemed
pursuant to Section 4.4 or Section 10.8 of the Amended LLC Agreement or if the
action with respect to the "the Collateral" referred to in Section 3.10 of the
Amended LLC Agreement is taken, then this Agreement shall terminate, and Buyer
shall have no further obligation to make any Fixed Deferred Payments, Variable
Deferred Payments, payments under the Base Note or any other obligations under
Article 2, except for those obligations and liabilities accrued through the date
of such termination.

                (d)     If the Closing has not been consummated by the close of
business on August 31, 2003, this Agreement shall automatically terminate,
unless the parties hereto mutually agree to a later termination date.

        6.2     Procedure and Effect of Termination. A termination of this
Agreement under Section 6.1 will not affect the rights of the Parties with
respect to breaches of any agreement, covenant, representation or warranty
contained in this Agreement, except as stated in Section 6.1 with respect to the
obligation of Buyer to make Fixed Deferred Payments, Variable Deferred Payments
or payments under the Base Note.

                                       27

<PAGE>

                                    ARTICLE 7
                                 INDEMNIFICATION

        7.1     Indemnification of Buyer. MHSI agrees, subject to Section 7.10,
to indemnify, defend and hold harmless the Buyer Indemnified Parties from and
against any and all Buyer Indemnified Costs; provided, however, that, except for
events specified in Section 2.9(c)(v) which relate to the period between the
Execution Date and the Closing Date and which have not been remedied (and in
spite of which Buyer elects to proceed with the Closing), MHSI's aggregate
obligation to indemnify the Buyer Indemnified Parties under this Section 7.1 and
Section 7.10 shall not exceed in the aggregate the MHSI Cap, except (a) as to
breaches of the representation in Section 3.3(j) (as to which no cap shall
apply) and (b) as to breaches of representations in subsections (i), (ii),
(iii), (iv) and (v) of Section 3.3(p) or any claim of fraud (as to which such
indemnification obligations shall not exceed in the aggregate 119% of all Tax
Credits allocated to Buyer).

        7.2     Indemnification of Seller. Buyer hereby agrees to indemnify,
defend and hold harmless the Seller Indemnified Parties from and against any and
all Seller Indemnified Costs; provided, however, that in no event shall Buyer's
aggregate obligation to indemnify the Seller Indemnified Parties under this
Section 7.2 exceed installments of Purchase Price and Monthly Capital
Contributions (as defined in the Amended LLC Agreement) required to be paid that
have not been paid at the time the request for indemnity is made.

        7.3     Defense of Third Party Claims. (a) An Indemnified Party shall
give written notice to any Indemnifying Party within 30 days after it has actual
knowledge of commencement or assertion of any action, proceeding, demand, or
claim by a third party (collectively, a "Third Party Claims") in respect of
which such Indemnified Party may seek indemnification under this Article 7. Such
notice shall state the nature and basis of such Third Party Claim and the events
and the amounts thereof to the extent known. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it, he, or she may have to such Indemnified Party under this Article 7,
except to the extent the failure to give such notice materially and adversely
prejudices such Indemnifying Party. In case any such action, proceeding or claim
is brought against an Indemnified Party, the Indemnifying Party shall be
entitled to participate in and, unless in the reasonable judgment of the
Indemnified Party a conflict of interest between it and the Indemnifying Party
may exist in respect of such action, proceeding or claim, to assume the defense
thereof, with counsel selected by the Indemnifying Party and reasonably
satisfactory to the Indemnified Party, and after notice from the Indemnifying
Party to the Indemnified Party of its election so to assume the defense thereof,
the Indemnifying Party shall not be liable to such Indemnified Party for any
legal or other expenses subsequently incurred by the latter in connection with
the defense thereof other than reasonable costs of investigation, provided
nothing contained herein shall permit the Company or Seller to control or
participate in any tax contest or dispute involving any Affiliate of Buyer, or
permit Buyer to control or participate in any tax contest or dispute involving
any Affiliate of Seller; further provided, however, that each Party agrees to
keep the other Party and the Company reasonably apprised of the status of such
tax contest and any settlement negotiations related solely to tax items that are
Company items at issue in such tax contest. In the event that (i) the
Indemnifying Party advises an Indemnified Party that it will not contest a claim
for indemnification hereunder, (ii) the Indemnifying Party fails, within 30 days
of receipt of any

                                       28

<PAGE>

indemnification notice to notify, in writing, such Indemnified Party of its
election, to defend, settle or compromise, at is sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense) or (iii) in the reasonable judgment of the Indemnified
Party, a conflict of interest between it and the Indemnifying Party exists in
respect of such action, proceeding or claim, then the Indemnified Party may, at
its option, defend, settle or otherwise compromise or pay such action or claim.
In any event, unless and until the Indemnifying Party elects in writing to
assume and does so assume the defense of any such claim, proceeding or action,
the Indemnifying Party shall be liable for the Indemnified Party's reasonable
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding. The Indemnified Party shall cooperate fully
with the Indemnifying Party in connection with any negotiation or defense of any
such action or claim by the Indemnifying Party. The Indemnifying Party shall
keep the Indemnified Party fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. If the Indemnifying
Party elects to defend any such action or claim, then the Indemnifed Party shall
be entitled to participate in such defense with counsel of its choice at its
sole cost and expense. If the Indemnifying Party does not assume such defense,
the Indemnified Party shall keep the Indemnifying Party apprised at all times as
to the status of the defense; provided, however, that the failure to keep the
Indemnifying Party so informed shall not affect the obligations of the
Indemnifying Party hereunder. The Indemnifying Party shall not be liable for any
settlement of any action, claim or proceeding effected without its written
consent; provided, however, that the Indemnifying Party shall not unreasonably
withhold, delay or condition its consent. Notwithstanding anything in this
Section 7.3 to the contrary, the Indemnifying Party shall not, without the
Indemnified Party's prior written consent, settle or compromise any claim or
consent to entry of judgment in respect thereof which imposes any future
obligation on the Indemnified Party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
Indemnified Party, a release from all liability in respect of such claim.

                (b)     If the amount of any Buyer Indemnified Costs, at any
time after the making of an indemnity payment in respect thereof, is reduced by
recovery, settlement or otherwise under any insurance coverage (excluding any
proceeds from self-insurance or flow-through insurance policies) or under any
claim, recovery, settlement or payment by or against any other entity, the
amount of such reduction, less any costs, expenses or premiums incurred in
connection therewith (together with interest thereon from the date of payment
thereof by such insurer or other entity to the Indemnified Party at the
Commercial Paper Rate), must promptly be repaid by the Indemnified Party to the
Indemnifying Party. Upon making any indemnity payment, the Indemnifying Party
will, to the extent of such indemnity payment, be subrogated to all rights of
the Indemnified Party against any third party, except third parties that provide
insurance coverage to the Indemnified Party or its Affiliates, in respect of the
Buyer Indemnified Costs to which the indemnity payment relates; provided,
however, that (i) the Indemnifying Party must then be in compliance with its
obligations under this Agreement in respect of such Buyer Indemnified Costs and
(ii) until the Indemnified Party recovers full payment of its Buyer Indemnified
Costs, any and all claims of the Indemnifying Party against any such third party
on account of said indemnity payment are hereby made expressly subordinate and
subject in right of payment to the Indemnified Party's rights against such third
party. Without limiting the generality or effect of any other provision hereof,
each such Indemnified Party and Indemnifying Party shall duly execute upon
request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights, and otherwise cooperate in
the

                                       29

<PAGE>

prosecution of such claims at the direction of the Indemnifying Party. Nothing
in this Section 7.3(b) will be construed to require any Party to obtain or
maintain any insurance coverage.

                (c)     The Parties hereby agree that, in the event of any
conflict between the rights and obligations of the Parties set forth in this
Section 7.3 with respect to defense of claims relating to any loss of Tax
Credits and the rights and obligations of the Members set forth in Section 7.7
of the Amended LLC Agreement, the provisions of the latter shall control.

        7.4     Direct Claims. In any case in which an Indemnified Party seeks
indemnification under this Article 7 which is not subject to Section 7.3 because
no Third Party Claim is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any costs which such Indemnified Party claims
are subject to indemnification under the terms of this Article 7. The failure of
the Indemnified Party to exercise promptness in such notification shall not
amount to a waiver of such claim, except to the extent the resulting delay
materially prejudices the position of the Indemnifying Party with respect to
such claim.

        7.5     After-Tax Basis. For tax reporting purposes, to the maximum
extent permitted by the Code, each Party will agree to treat all amounts paid
under any of the provisions of this Article 7 as an adjustment to the purchase
price for the Membership Interest (or otherwise as a non-taxable reimbursement,
contribution or return of capital, as the case may be). To the extent that any
indemnification payment treated as a purchase price adjustment arises from a
loss that does not give rise to a deduction for the Indemnified Party for income
tax purposes, such indemnification payment shall be increased in an amount
equal, on an after-tax basis, to the lost tax benefits (calculated using a
discount rate of ten percent per annum and assuming that depreciation or
amortization deductions would be fully utilized when available) or additional
tax due as a result of the purchase price adjustment. To the extent any such
indemnification payment is includable as income of the Indemnified Party as
determined by agreement of the Parties, or if there is no agreement, by an
opinion of Chadbourne & Parke LLP or other nationally recognized tax counsel of
the Indemnified Party (after consultation in good faith with the Indemnifying
Party and its tax counsel) that such amount is "more likely than not" includable
as income of the recipient (accompanied by certification by the Indemnified
Party's tax director or a managing director of its tax department that such
amount will be included as income in the consolidated federal income tax return
in which such amount would be includable), the amount of the payment shall be
increased by the amount of any federal or state income tax required to be paid
by the Indemnified Party or its Affiliates on the receipt or accrual of the
indemnification payment, including, for this purpose, the amount of any such Tax
required to be paid by the Indemnified Party on the receipt or accrual of the
additional amount required to be added to such payment pursuant to this Section
7.5, using an assumed rate equal to the highest marginal federal income tax rate
applicable to corporations generally (currently 35 percent) and an assumed
blended state and local tax rate of 5.25 percent (taking into account the
deductibility of state income tax for federal income tax purposes) applicable to
corporations from time to time and assuming that the Indemnified Party and its
Affiliates recognize the same amount of taxable income for state and local
income tax purposes as they recognize for federal income tax purposes in respect
of such indemnification payment. Any payment made under this Article 7 shall be
reduced by the present value (as determined on the basis of a discount rate
equal to ten percent per annum) of any federal or state income tax benefit to be
realized by the Indemnified Party or its Affiliates by reason of the facts and
circumstances giving rise to such indemnification. For

                                       30

<PAGE>

purposes of this Section 7.5, the amount of any state income tax benefit or cost
shall take into account the federal income tax effect of such benefit or cost.

        7.6     Express Negligence Rule. WITHOUT LIMITING OR ENLARGING THE SCOPE
OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS ARTICLE 7, AN INDEMNIFIED
PARTY SHALL BE ENTITLED TO INDEMNIFICATION UNDER THIS ARTICLE 7 IN ACCORDANCE
WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE LOSS OR CLAIM GIVING RISE TO
SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR
COMPARATIVE NEGLIGENCE, GROSS NEGLIGENCE, STRICT LIABILITY OR VIOLATION OF ANY
LAW OF OR BY SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS PARAGRAPH
CONSTITUTES A CONSPICUOUS LEGEND.

        7.7     No Duplication. Any liability for indemnification under this
Article 7 shall be determined without duplication of recovery by reason of the
state of facts giving rise to such liability constituting a breach of more than
one representation, warranty, covenant or agreement. The liability of any Party
hereunder with respect to the representations and warranties of such Party will
not be reduced by any investigation made at any time by or on behalf of any
other Party.

        7.8     Sole Remedy. The remedies of the Parties under this Article VII
are the sole and exclusive remedies that a Party may have under this Agreement
for the recovery of monetary damages with respect to any breach or failure to
perform any covenant or agreement set forth in Article IV of this Agreement or
any breach of any representation or warranty set forth in this Agreement.

        7.9     Survival.

                (a)     All representations, warranties, covenants and
obligations made or undertaken by a Party in this Agreement or in any
Transaction Document are material, have been relied upon by the other Parties
and shall survive the Closing hereunder as set forth in this Section 7.9, and
shall not merge in the performance of any obligation by any Party hereto.

                (b)     Subject to Section 7.10, all claims by a Buyer
Indemnified Party for indemnification pursuant to this Article 7 resulting from
breaches of representations or warranties shall be forever barred unless MHSI is
notified within 18 months after the Closing Date, except that the
representations and warranties set forth in Sections 3.3(i) and 3.3(p) with
respect to the period after October 15, 2001 shall survive until six months
after the expiration of the applicable statute of limitations (giving effect to
any waiver, mitigation or extensions thereof); provided, that, if written notice
of a claim for indemnification has been given by such Buyer Indemnified Party on
or prior to the last day of the respective foregoing period, as applicable, then
the obligation of MHSI to indemnify such Buyer Indemnified Party pursuant to
this Article 7 shall survive with respect to such claim until such claim is
finally resolved.

                (c)     All claims by a Seller Indemnified Party for
indemnification pursuant to this Article 7 resulting from breaches of
representations or warranties shall be forever barred

                                       31

<PAGE>

unless Buyer is notified within 18 months after the Closing Date; provided,
that, if written notice for a claim of indemnification has been given by such
Seller Indemnified Party on or prior to the last day of the foregoing period,
then the obligation of Buyer to indemnify such Seller Indemnified Party pursuant
to this Article 7 shall survive with respect to such claim until such claim is
finally resolved.

        7.10    Indemnification as to Historical Representations and Warranties;
Other Indemnification.

                (a)     For the period up to and including October 15, 2001,
Seller and MHSI have, in Section 3.2 hereof, repeated the Historical
Representations and Warranties under the PacifiCorp/Marriott Agreement. With
respect to any claim for breach of representations or warranties contained in
Section 3.2 hereof, the sole remedy of Buyer is the following. Buyer shall
notify MHSI of Buyer's claim and MHSI shall cause Marriott to seek from
PacifiCorp any indemnification or pursue any other claim in contract, tort or
equity available to Marriott (considering any survival periods in the
PacifiCorp/Marriott Agreement) from PacifiCorp for breach of the counterpart
Historical Representation and Warranty or for other breach of the
PacifiCorp/Marriott Agreement. Any indemnification amounts resulting therefrom
which are paid to Marriott shall be caused by MHSI to be divided by Marriott
between Buyer and Marriott on a pro rata basis reflecting the relative damages
suffered by Buyer from the Closing Date to the date the claim giving rise to
such indemnification is made and by Marriott and/or MHSI from October 15, 2001
to the date the claim giving rise to such indemnification is made. To the extent
that aggregate indemnification payments made by PacifiCorp to Marriott with
respect to a breach or breaches by PacifiCorp of representations and warranties
contained in Section 3.2 of the PacifiCorp/Marriott Agreement are less than the
indemnification payments required to be made therefor by PacifiCorp under such
Agreement, MHSI agrees to indemnify Buyer for the amount of such deficiency;
provided, however, that, except as otherwise provided in Section 7.1, in no
event shall MHSI's aggregate obligations under this Section 7.10 and Section 7.1
(in each case excluding indemnification payments made directly by PacifiCorp in
respect of breach of Historical Representations and Warranties) exceed in the
aggregate the MHSI Cap.

                (b)     As provided in Section 3.3 hereof, the representations
and warranties set forth therein (except for those which expressly relate to the
period before October 15, 2001) have effect from, and relate only to, the period
commencing October 15, 2001, and the indemnification obligations of MHSI under
this Article 7 in respect of such Section 3.3 relate only to that period.

                                    ARTICLE 8
                               GENERAL PROVISIONS

        8.1     Exhibits and Schedules. All Exhibits and Schedules attached
hereto are incorporated herein by reference.

        8.2     Further Actions. After the Execution Date, each of Seller, MHSI
and Buyer shall, without further consideration, at its own expense, execute and
deliver such other certificates, agreements, conveyances, and other documents,
and take such other action, as may be reasonably requested by the other Party in
order to transfer and assign to, and vest in, Buyer

                                       32

<PAGE>

all right, title and interest in the Membership Interest and more effectively to
consummate the sale of the Membership Interest pursuant to the terms of this
Agreement.

        8.3     Amendment, Modification and Waiver. This Agreement may not be
amended or modified except by an instrument in writing signed by the Party
against which enforcement of such amendment or modification is sought. Any
failure of Buyer on the one hand, or Seller or MHSI, on the other hand, to
comply with any obligation, covenant, agreement, or condition contained herein
may be waived only if set forth in an instrument in writing signed by the Party
or Parties to be bound thereby, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any other failure.

        8.4     Severability. If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any rule of Applicable
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated herein are not affected in any
manner materially adverse to any Party.

        8.5     Expenses and Obligations. Except as otherwise expressly provided
in this Agreement, all costs and expenses incurred by the Parties in connection
with this Agreement and the consummation of the transactions contemplated hereby
shall be borne solely and entirely by the Party which has incurred such
expenses. Seller and MHSI acknowledge and agree that the Operating Company has
not borne and will not bear, any of Seller's or MHSI's costs and expenses
(including legal fees and expenses) in connection with this Agreement or the
transactions contemplated hereby.

        8.6     Parties in Interest. This Agreement shall be binding upon and,
except as provided below, inure solely to the benefit of each Party and their
successors and assigns, and nothing in this Agreement, express or implied, is
intended to confer upon any other Person (other than the Buyer Indemnified
Parties and Seller Indemnified Parties as provided in Article 7) any rights or
remedies of any nature whatsoever under or by reason of this Agreement.

        8.7     Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, by a nationally
recognized overnight courier, by facsimile, or mailed by registered or certified
mail (return receipt requested) to the Parties at the following addresses (or at
such other address for a Party as shall be specified by like notice):

                (a)     If to Seller, to:

                        Synthetic American Fuel
                        Enterprises Holdings, Inc.
                        10400 Fernwood Road
                        Bethesda, MD 20817
                        Attention: Senior Vice President, Tax
                        Fax: 301-380-8299

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<PAGE>

                        With a copy to:

                        Marriott International, Inc.
                        10400 Fernwood Road
                        Bethesda, MD 20817
                        Attention: General Counsel
                        Fax: (301) 380-6727

                (b)     If to MHSI, to:

                        Marriott Hotel Services, Inc.
                        10400 Fernwood Road
                        Bethesda, MD 20817
                        Attention: Senior Vice President, Tax
                        Fax: 301-380-8299

                        With a copy to:

                        Marriott International, Inc.
                        10400 Fernwood Road
                        Bethesda, MD 20817
                        Attention: General Counsel
                        Fax: (301) 380-6727

                (c)     If to Buyer, to:

                        Serratus LLC
                        c/o Morgan Stanley
                        c/o _______________
                        ___________________
                        New York, NY ______
                        Attention: __________________________
                        Fax: _________________________
                        With a copy to:

                        ___________________
                        ___________________
                        New York, NY _____
                        Attention: __________________________
                        Fax: _______________

All notices and other communications given in accordance herewith shall be
deemed given (i) on the date of delivery, if hand delivered, (ii) on the date of
receipt, if faxed (provided a hard copy of such transmission is dispatched by
first class mail within 48 hours), (iii) three Business Days

                                       34

<PAGE>

after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and (iv) one Business Day after the date of sending, if sent
by a nationally recognized overnight courier; provided, that a notice given in
accordance with this Section 8.7 but received on any day other than a Business
Day or after business hours in the place of receipt, will be deemed given on the
next Business Day in that place.

        8.8     Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the Parties and delivered
to the other Parties, it being understood that all Parties need not sign the
same counterpart.

        8.9     Entire Agreement. This Agreement (which term shall be deemed to
include the Exhibits and Schedules hereto and the other certificates, documents
and instruments delivered hereunder) constitutes the entire agreement of the
Parties and supersedes all prior agreements, letters of intent and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof. There are no representations or warranties, agreements,
or covenants other than those expressly set forth in this Agreement.

        8.10    Governing Law; Choice of Forum; Waiver of Jury Trial. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED THEREIN. THE
PARTIES HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE
OR FEDERAL COURT IN NEW YORK WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING
TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.

        8.11    Public Announcements. Except for statements made or press
releases issued (i) pursuant to the Securities Act of 1933 or the Securities
Exchange Act of 1934, (ii) pursuant to any listing agreement with any national
securities exchange or the National Association of Securities Dealers, Inc., or
(iii) as otherwise required by law, neither MHSI, the Seller, the Buyer or any
of its Affiliates shall issue any press release or otherwise make any public
statements with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of the other Parties. MHSI, on the one
hand, and Buyer, on the other hand, will have the right to review in advance all
information relating to the transactions contemplated by the Transaction
Documents that appear in any filing made in connection with the transactions
contemplated hereby or thereby.

        8.12    Assignment. This Agreement and all of the provisions hereof will
be binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns. This Agreement may only be assigned to the
same extent (and only by and to the same Persons) that membership interests in
the Operating Company are assignable pursuant to the terms of Article X of the
Amended LLC Agreement. Any attempted assignment of this Agreement other than in
strict accordance with this Section 8.12 and the terms of Article X of the
Amended LLC

                                       35

<PAGE>

Agreement shall be null and void and of no force or effect.

        8.13    Relationship of Parties. This Agreement does not constitute a
joint venture, association or partnership between the Parties. No express or
implied term, provision or condition of this Agreement shall create, or shall be
deemed to create, an agency, joint venture, partnership or any fiduciary
relationship between the Parties.

                       [Signatures on the Following Page]

                                       36

<PAGE>

                IN WITNESS WHEREOF, each party hereto has caused this Agreement
for Purchase of Membership Interest to be signed on its behalf as of the date
first written above.

                                         SYNTHETIC AMERICAN FUEL
                                         ENTERPRISES HOLDINGS, INC.

                                         By:   /s/  Mark W. Brugger
                                             -----------------------------------
                                         Name:      Mark W. Brugger
                                               ---------------------------------
                                         Title:     President
                                                --------------------------------

                                         MARRIOTT HOTEL SERVICES, INC.

                                         By:   /s/  Mark W. Brugger
                                             -----------------------------------
                                         Name:      Mark W. Brugger
                                               ---------------------------------
                                         Title:     Vice President
                                                --------------------------------

                                         SERRATUS LLC

                                         By:   /s/
                                              ----------------------------------
                                         Name:      John
                                               ---------------------------------
                                         Title:
                                                --------------------------------

<PAGE>

                                     ANNEX I

                                   DEFINITIONS

                "Actual Credit Amount" has the meaning set forth in Section
2.5(d).

                "Adjustment Date" means the first Quarterly Payment Date after
May 31 of each calendar year.

                "Account" shall mean an account of Seller, as designated in
writing by Seller no later than five Business Days prior to the first applicable
Quarterly Payment Date after the Closing Date for which a Fixed Deferred
Payment, Variable Deferred Payment or payment under the Base Note is due
hereunder, or such other account as Seller shall designate in writing no later
than ten Business Days prior to the next applicable Quarterly Payment Date at
any time following the Closing Date.

                "Accounting Firm" means the Operating Company's primary
independent accounting firm, which shall be Deloitte & Touche or such other
"Final 4" firm of certified public accountants (i.e., Ernst & Young, KPMG Peat
Marwick or PricewaterhouseCoopers) selected by the Administrative Member and
approved by the Buyer.

                "Administrative Member" means MHSI in its capacity as
administrative member of the Operating Company under the Amended LLC Agreement
or such Person that is appointed pursuant to and in accordance with the terms of
the Amended LLC Agreement as the administrative member.

                "Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such first Person. For
purposes of this definition and the Agreement, (a) the term "control" (and
correlative terms) means (1) the ownership of 50% or more of the equity interest
in a Person, or (2) the power, whether by contract, equity ownership or
otherwise, to direct or cause the direction of the policies or management of a
Person, and (b) the Operating Company shall be deemed to be an Affiliate of
Seller prior to the Closing (for purposes of representations and warranties),
but shall not be deemed to be an Affiliate of Seller or Buyer from and after the
Closing.

                "Agreement" means this Agreement for Purchase of Membership
Interest.

                "Amended LLC Agreement" means the Amended and Restated Limited
Liability Company Agreement of the Operating Company, of even date herewith, by
and among Seller, Holdings and Buyer in the form attached hereto as Exhibit I.

                "Annual Adjustment Amount" has the meaning set forth in Section
2.5(d).

                "Applicable Laws" means all laws (including common law),
statutes, rules, regulations, ordinances, judgments, settlements, orders,
decrees, injunctions, and writs of any Governmental Authority having
jurisdiction over the Facilities, the Subject Assets, or the operations of the
Operating Company, including any applicable zoning laws and building codes.

<PAGE>

                "Applicable Percentage" means 119 percent.

                "Assignment Agreement" means the Assignment of Membership
Interest, of even date herewith, by and between Buyer and Seller.

                "Balance Sheets" has the meaning set forth in Section 3.3(a)(i).

                "Balance Sheet Date" has the meaning set forth in Section
3.3(a)(ii).

                "Base Note" means the promissory note attached hereto as Exhibit
A.

                "Business Day" means any day other than (i) a Saturday or Sunday
or (ii) a day on which commercial banks in New York, New York are authorized or
required to be closed.

                "Buyer" has the meaning set forth in the first paragraph of the
Agreement and includes its permitted successors and assigns.

                "Buyer Indemnified Costs" means any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties, costs, and expenses
(including disallowance of Tax Credits or other tax deductions, together with
IRS interest and penalties thereon and reasonable costs and expenses of any and
all actions, suits, proceedings, investigations, assessments, judgments,
settlements and compromises relating thereto and reasonable attorneys' fees and
reasonable disbursements in connection therewith, whether such costs, expenses,
fees and disbursements relate to a third party claim or to a claim by Buyer
directly against Seller or MHSI) incurred by any of the Buyer Indemnified
Parties resulting from or relating to any breach or default by Seller or MHSI of
any representation, warranty, covenant, indemnity or agreement under this
Agreement or any other Transaction Document or a claim for fraud.

                "Buyer Indemnified Parties" means Buyer and each of its
Affiliates and each of their respective shareholders, members, officers,
directors, employees, agents, and other representatives, and their respective
successors and assigns.

                "Buyer Parent" has the meaning set forth in the recitals to the
Agreement.

                "Buyer Parent Guaranty" means the Guarantee, of even date
herewith, made by Buyer Parent in favor of Seller, MHSI and the Operating
Company substantially in the form attached hereto as Exhibit E.

                "Buyer Security Agreement" means the Pledge and Security
Agreement, of even date herewith, by Buyer in favor of Seller and the Operating
Company in the form attached hereto as Exhibit G.

                "CERCLA" has the meaning set forth in the definition of
Environmental Laws contained in this Annex I.

                "CERCLIS" has the meaning set forth in Section 3.2(i).

<PAGE>

                "Cleared Person" means the Tennessee Valley Authority, Tampa
Electric Company, Alabama Power Company and any Person as to which Buyer
notifies Seller (or is deemed to have notified Seller) is a Cleared Person in
the Customer Certificate pursuant to Section 2.5(g) hereof, such Person to
constitute a Cleared Person for purposes hereof as of the date of such Customer
Certificate and at all times prior thereto.

                "Closing" means, subject to Section 2.9(c), the satisfaction of
the requirements set forth in Section 2.9(b).

                "Closing Date" means the date of the Closing specified in
Section 2.9(b).

                "Code" means the United States Internal Revenue Code of 1986, as
amended.

                "Commercial Paper Rate" means, for each day that any payment
obligation hereunder is outstanding, the most recent published yield on
commercial paper with the shortest quoted period of not fewer than 30 days
placed by dealers, as reported for each such day either in the Federal Reserve
Rate Report that customarily appears in the Friday issue of The Wall Street
Journal (Eastern Edition) under "Money Rates" or, if such report does not so
appear, in such other nationally-recognized publication or electronic data
service as Seller and Buyer may, from time to time, agree on. On days when such
a rate is not reported, the most recently reported rate on a preceding day will
be deemed to be the applicable rate.

                "Consent" means any consents or approval of any Governmental
Authority or any other Person.

                "Consultation" or "Consult" means to confer with, and reasonably
consider and take into account the reasonable suggestions, comments or opinions
of another Person.

                "Contracts" means all written agreements, contracts, or other
binding commitments or arrangements (including any amendments and other
modifications thereto), to which the Operating Company is a party or is
otherwise bound and which affect, relate to, or are included in, the Subject
Assets.

                "Customer Certificate" has the meaning given to such term in
Section 2.5(g) hereof.

                "Environmental Costs or Liabilities" means any losses,
liabilities, obligations, damages, fines, penalties, judgments, settlements,
actions, claims, demands, costs and expenses (including costs relating to
personal injury, death or property damage, reasonable fees, disbursements and
expenses of legal counsel, experts, engineers and consultants, and the costs of
investigation or feasibility studies and performance of remedial or removal
actions and cleanup and monitoring activities) arising from, under or in
connection with (a) any violation of, or alleged violation of, any Environmental
Laws, (b) any remedial obligation under any Environmental Laws, or (c) any other
liability imposed under any Environmental Laws.

                "Environmental Laws" means all Applicable Laws and rules of
common law pertaining to the environment, human health, safety and natural
resources, including, but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act of

<PAGE>

1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Emergency Planning and
Community Right to Know Act and the Superfund Amendments and Reauthorization Act
of 1986, the Resource Conservation and Recovery Act of 1976, the Hazardous and
Solid Waste Amendments Act of 1984, the Clean Air Act, the Clean Water Act, the
Federal Water Pollution Control Act, the Toxic Substances Control Act, the Safe
Drinking Water Act, the Occupational Safety and Health Act of 1970, the Federal
Mine Safety and Health Act, the Surface Mining Control and Reclamation Act, the
Oil Pollution Act of 1990, the Hazardous Materials Transportation Act, and any
similar or analogous statutes, regulations promulgated thereunder and decisional
law of any Governmental Authority, as each of the foregoing may have been or are
in the future amended or supplemented, in each case to the extent applicable
with respect to the property or operation to which application of the term
"Environmental Laws" relates.

                "ERISA" means the United States Employee Retirement Income
Security Act of 1974, as amended.

                "Escrow Account" means the account maintained by the Escrow
Agent pursuant to the Escrow Agreement.

                "Escrow Agent" means the escrow agent under the Escrow
Agreement.

                "Escrow Agreement" means the Escrow Agreement to be entered into
among MHSI, Holdings, Buyer and the Escrow Agent as soon as practicable after
the date hereof in substantially the form attached hereto as Exhibit L.

                "Estimated Tax Credits" has the meaning set forth in Section
2.5(b).

                "Excluded Boxes" means the items described in Schedule
3.3(p)(iv)A.

                "Excluded Sales" means (a) sales of Pre-Sale Inventory and (b)
sales to any MS Related Person that is not a Cleared Person.

                "Execution Date" has the meaning set forth in Section 2.9(a).

                "Exhibits" means the Exhibits attached to the Agreement.

                "Facilities" has the meaning set forth in the recitals to the
Agreement.

                "Final Adjustment Amount" has the meaning set forth in Section
2.5(e).

                "Final Adjustment Date" means June 20 of the year following the
year that the last Variable Deferred Payment is due under Section 2.5.

                "Financial Statements" has the meaning set forth in Section
3.2(a)(i).

                "Fiscal Year" means the fiscal year of the Operating Company,
which shall be the same as the taxable year of the Operating Company. The
taxable year of the Operating Company will be a year that ends on November 30,
or such other year as may be required by applicable federal income tax law.

<PAGE>

                "Fixed Deferred Payment" has the meaning set forth in Section
2.4.

                "Fixed Payment Term" has the meaning set forth in Section 2.4.

                "GAAP" means generally accepted accounting principles as
recognized by the American Institute of Certified Public Accountants, as in
effect from time to time, consistently applied and maintained on a consistent
basis for a Person throughout the period indicated and consistent with such
Person's prior financial practice.

                "Governmental Authority" means any governmental department,
commission, board, bureau, agency, court or other instrumentality of any
country, state, province, county, parish or municipality, jurisdiction, or other
political subdivision thereof.

                "Hazardous Substances" means (A) any hazardous materials,
hazardous wastes, hazardous substances, toxic wastes, solid wastes, and toxic
substances as those or similar terms are defined under any Environmental Laws;
(B) any asbestos or any material which contains any hydrated mineral silicate,
including chrysolite, amosite, crocidolite, tremolite, anthophylite and/or
actinolite, whether friable or non-friable; (C) polychlorinated biphenyls
("PCBs"), or PCB-containing materials, or fluids; (D) radon; (E) any other
hazardous, radioactive, toxic or noxious substance, material, pollutant,
contaminant, constituent, or solid, liquid or gaseous waste; (F) any petroleum,
petroleum hydrocarbons, petroleum products, crude oil and any fractions or
derivatives thereof, and any natural gas, synthetic gas and any mixtures
thereof; and (G) any substance that, whether by its nature or its use, is
subject to regulation under any Environmental Laws or with respect to which any
Environmental Laws or Governmental Authority requires environmental
investigation, monitoring or remediation.

                "Historical Representations and Warranties" has the meaning set
forth in Section 3.2.

                "Indemnified Party" means any Person seeking indemnification
from another Person pursuant to Article 7.

                "Indemnifying Party" means any Person against whom a claim for
indemnification is asserted by another Person pursuant to Article 7.

                "Independent Chemist" means Paspek Consulting LLC, or such other
chemist as may be chosen by the Members of the Company from time to time.

                "Independent Engineer" means John T. Boyd Company, or such other
engineer as selected by the Buyer from time to time.

                "Intellectual Property" means all trademarks, know-how,
copyrights, copyright registrations and applications for registration, patents
and all other intellectual property rights including Internet domain names,
whether registered or not, and the goodwill related to all of the foregoing.

                "IRS" means the Internal Revenue Service of the United States of
America.

<PAGE>

                "Knowledge" means the actual knowledge of, or knowledge that
would have been obtained after reasonable investigation by, with respect to a
Party and its Affiliates, any of its respective officers, directors or
management personnel. References to Marriott's Knowledge shall mean the
Knowledge of Marriott, MHSI or Seller.

                "Liabilities" has the meaning set forth in Section 3.3(a)(iii).

                "Liens" has the meaning set forth in Section 3.3(h).

                "Manager" has the meaning set forth in the Amended LLC
Agreement.

                "Marriott" has the meaning set forth in the recitals to the
Agreement.

                "Marston Report" means a report entitled "Verification of
Synfuel Project Asset Relocation" prepared by Marston & Marston, Inc. for
Synthetic American Fuel Enterprises I, LLC and Synthetic American Fuel
Enterprises II, LLC and dated June 2002.

                "Material Adverse Effect" means a material adverse effect on the
ability of the Companies to validly claim Tax Credits (under the Tax laws as
they exist as of the date of this Agreement) from the sale of Synfuel or on the
business, operations, properties, condition, results of operations, assets,
liabilities, or prospects (financial or otherwise) of the Company taken as a
whole or the transactions contemplated hereby.

                "Membership Interest" means a 48.9% membership interest in the
Operating Company, including an 0.1% membership interest previously acquired by
Buyer (it being understood that Seller is not required to convey such 0.1%
interest a second time).

                "MHSI Cap" means 53% of the aggregate Tax Credits, plus
Estimated Tax Credits for any period as to which a Tax Return has not yet been
filed, to the time or times that an indemnification claim is made, less the
aggregate of all indemnification payments based on the MHSI Cap theretofore made
pursuant to Sections 7.1 and 7.10 hereof.

                "MSHA" means the Mine Safety and Health Act of 1977, as amended
(29 U.S.C. Section 801 et seq.).

                "MS Related Person" means any Person which, as to the Operating
Company, at a given point in time, is a "related person" within the meaning of
Section 29(d)(7) of the Code by reason of a direct or indirect relationship or
affiliation with Buyer or any of Buyer's Affiliates.

                "NPL" has the meaning set forth in Section 3.3(i)(v).

                "Operating Company" or "Company" has the meaning set forth in
the recitals to the Agreement.

                "Operations Report" has the meaning set forth in Section 2.5(b).

                "Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency) of the Operating

<PAGE>

Company and consistent with usual and customary practices of the coal-based
synthetic fuel industry.

                "PacifiCorp" has the meaning set forth in the recitals to the
Agreement.

                "PacifiCorp/Marriott Agreement" has the meaning set forth in the
recitals to the Agreement.

                "Party" means a party to the Agreement.

                "Permits" has the meaning set forth in Section 3.3(b).

                "Permitted Liens" means (a) liens for Taxes not yet due; (b)
carrier's, warehousemen's, mechanics', materialmen's, repairmen's, employees',
contractors', operators' or other similar liens or charges securing the payment
of expenses not yet due and payable that were incurred in the Ordinary Course of
Business, but not exceeding $250,000; (c) any obligations or duties to any
Governmental Authority arising in the Ordinary Course of Business with respect
to any Permit held by the Operating Company, and all Applicable Laws, rules,
regulations and orders of any Governmental Authority; (d) required third party
Consents listed in Schedule 3.1(e); and (e) minor imperfections of title that
would not materially affect the value, use, operation or ownership of any asset.

                "Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, or other
entity.

                "Personal Property" means machinery, equipment, computer
programs, computer software, tools, motor vehicles, furniture, furnishings,
leasehold improvements, fixtures, office equipment, inventories, supplies, spare
parts, and other tangible or intangible personal property.

                "Plan" means each defined benefit pension plan subject to Title
IV of ERISA that is or was maintained, sponsored or established for employees
for any ERISA Affiliate or to which any ERISA Affiliate has or has had any
liability or any obligation to contribute, including any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA.

                "Pre-Sale Inventory" means the Company's inventory of synthetic
fuel held for sale as of the Closing Date.

                "Private Letter Ruling" has the meaning set forth in Section
2.9(b).

                "Prudent Operating Standards" means those standards, methods and
acts that (a) when engaged in are commonly used in prudent engineering
maintenance and operations of synthetic fuel production facilities and
associated mechanical and handling facilities and equipment lawfully and with
safety, reliability, efficiency and expedition or (b) in the exercise of
reasonable judgment considering the facts known when engaged in, could have been
expected to achieve the desired result consistent with applicable law, safety,
reliability, efficiency and expedition. Prudent Operating Standards are not
limited to the optimum practice, method or act, but rather are a spectrum of
possible practices, methods of acts.

<PAGE>

                "Purchase Price" has the meaning set forth in Section 2.2.

                "Quarter" means the periods corresponding to one fourth of a
full Fiscal Year of the Operating Company (which shall be three month periods if
such Fiscal Year is based on a 365 day year, and periods of thirteen or fourteen
weeks if such Fiscal Year is a 52-53 week year), or the applicable portion of
such periods in the case of any short Fiscal Year.

                "Quarterly Maximum Production" means not more than 1,920,000
tons of synthetic fuel in any Quarter.

                "Quarterly Payment Date" has the meaning set forth in Section
2.5(b).

                "Request" has the meaning set forth in Section 5.3(a).

                "Schedules" means the Schedules attached to the Agreement.

                "Seller" has the meaning set forth in the first paragraph of the
Agreement.

                "Seller Parent" has the meaning set forth in the recitals to the
Agreement.

                "Seller Parent Guaranty" means the Guarantee, of even date
herewith, made by Seller Parent in favor of Buyer substantially in the form
attached hereto as Exhibit F.

                "Seller Indemnified Costs" means any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties, costs, and expenses
(including court costs and reasonable attorneys' fees and expenses) incurred by
any of the Seller Indemnified Parties resulting from or relating to any breach
or default by Buyer of any representation, warranty, covenant, indemnity or
agreement under this Agreement or any Transaction Document.

                "Seller Indemnified Parties" means Seller, MHSI and each of
their respective Affiliates, including the Operating Company prior to the
Closing, and each of their respective officers, directors, employees, agents and
other representatives, and their respective successors and assigns.

                "Seller Parties" means Seller Parent, Seller, MHSI, the
Operating Company, and each of their Affiliates.

                "Seller Security Agreement" means the Pledge and Security
Agreement, of even date herewith, by MHSI in favor of Buyer and the Operating
Company in the form attached hereto as Exhibit H.

                "Subject Assets" means all of the assets of the Operating
Company, both tangible and intangible, including the Facilities.

                "SynAmerica I" has the meaning set forth in the recitals to the
Agreement.

<PAGE>

                "SynAmerica I Purchase Agreement" means the Agreement for
Purchase of Membership Interest relating to SynAmerica I, of even date herewith,
by and among Seller, Buyer and MHSI.

                "Synfuel" means solid synthetic fuel produced by any Facility
combining coal with a chemical reagent at such Facility.

                "Tax" or "Taxes" means any taxes, assessments, fees and other
governmental charges imposed by any Governmental Authority, including income,
profits, gross receipts, net proceeds, alternative or add-on minimum, ad
valorem, value added, turnover, sales, use, property, personal property
(tangible and intangible), environmental, stamp, leasing, lease, user, excise,
duty, franchise, capital stock, transfer, registration, license, withholding,
social security (or similar), unemployment, disability, payroll, employment,
fuel, excess profits, occupational, premium, windfall profit, severance,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.

                "Tax Credits" means the tax credits provided by Section 29(a) of
the Code with respect to the sale of Synfuel produced by the Facilities.

                "Tax Event" has the meaning assigned to it in the Amended LLC
Agreement.

                "Tax Returns" means any return, report, statement, information
return or other document (including any amendments thereto and any related or
supporting information) filed or required to be filed with any Governmental
Authority in connection with the determination, assessment, collection or
administration of any Taxes or the administration of any laws, regulations or
administrative requirements relating to any Taxes.

                "Taxing Authority" means, with respect to any Tax, the
Governmental Authority that imposes such Tax, and the agency (if any) charged
with the collection of such Tax for such entity or subdivision, including any
Governmental Authority that imposes, or is charged with collecting, social
security or similar charges or premiums.

                "Termination Date" means the effective date specified in the
Termination Notice, which shall not be longer than 60 days after the occurrence
of such Tax Event, and in any event no later than December 31, 2003.

                "Termination Notice" means a notice given by Buyer to the
Operating Company and to MHSI before the close of business on December 31, 2003
specifying (i) that a Tax Event as set forth in the last sentence of the
definition of Tax Event has occurred, (ii) that Buyer elects to terminate this
Agreement with the effects provided in Sections 2.5(g) and 6.1(b) hereof and
(iii) the Termination Date.

                "Third Party Claim" has the meaning set forth in Section 7.3.

                "Transaction Documents" means this Agreement and each other
agreement, document and instrument required to be executed or entered into in
accordance herewith or pursuant to the earlier transfer of an 0.1% interest to
Buyer.

<PAGE>

                "Variable Deferred Payment" has the meaning set forth in Section
2.5(a).

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