SECURITIES EXCHANGE AGREEMENT
This
SECURITIES EXCHANGE AGREEMENT (this “Agreement”),
dated
as of August 28, 2006, is by and among RTO HOLDINGS, INC., a Nevada corporation
(the “Parent”),
ORION
ETHANOL, LLC, a Kansas limited liability company (the “Company”),
and
the members of the Company signatory hereto (the “Members”).
BACKGROUND
The
Company has 100,000 units that evidence membership interests in the Company
(the
“Company
Units”)
outstanding, all of which are held by the Members. Each of the Members is the
record and beneficial owner of the number of Company Units set forth opposite
such Member’s name on Exhibit
A.
Each of
the Members has agreed to transfer all of his, her or its (hereinafter
“its”)
Company Units to the Parent in exchange for the number of newly issued shares
of
common stock, par value $0.001 per share, of the Parent (the “Parent
Stock”)
listed
opposite such Member’s name on Exhibit
A,
which
in the aggregate amount to a total of 31,272,740 shares of Parent Stock (the
“Shares”)
and
represent control of the Parent within the meaning of Section 368(c) of the
Internal Revenue Code of 1986, as amended (the “Code”).
The
exchange of the Company Units for Parent Stock is intended to constitute a
non-taxable transfer to a controlled corporation under Code Section 351(a)
for
federal income tax purposes.
The
Board
of Directors of the Parent and the Company have determined that it is desirable
to effect this plan of reorganization and securities exchange.
AGREEMENT
NOW
THEREFORE, the parties agree as follows:
ARTICLE
I
Exchange
of Securities
SECTION
1.01. Exchange
by Members.
At the
Closing (as defined in Section 1.02), each of the Members shall sell, transfer,
convey, assign and deliver to the Parent its Company Units free and clear of
all
Liens (as defined below) in exchange for the Parent Stock listed on Exhibit
A
opposite
such Member’s name.
SECTION
1.02. Closing.
The
closing (the “Closing”)
of the
transactions contemplated hereby (the “Transactions”)
shall
take place on the date hereof (the “Closing
Date”).
ARTICLE
II
Representations
and Warranties of Members
Each
of
the Members hereby severally (and not jointly) represents and warrants to the
Parent with respect to itself, as follows:
SECTION
2.01. Good
Title.
The
Member is the record and beneficial owner, and has good title to its Company
Units, with the right and authority to sell and deliver such Company Units.
Upon
delivery of any certificate or certificates duly assigned, representing the
same
as herein contemplated and/or upon registering of the Parent as the new owner
of
the Company Units in the share register of the Company, the Parent will receive
good title to its Company Units, free and clear of all liens, security
interests, pledges, equities and claims of any kind, voting trusts, member
agreements and other encumbrances (collectively, “Liens”).
SECTION
2.02. Organization.
Each
Member that is an entity is duly organized and validly existing in its
jurisdiction of organization.
SECTION
2.03. Power
and Authority.
Each
Member that is an entity has the legal power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. All acts
required to be taken by the Members to enter into this Agreement and to carry
out the Transactions have been properly taken. This Agreement constitutes a
legal, valid and binding obligation of the Member, enforceable against such
Member in accordance with the terms hereof.
SECTION
2.04. No
Conflicts.
The
execution and delivery of this Agreement by the Member and the performance
by
the Member of its obligations hereunder in accordance with the terms hereof:
(i)
will not require the consent of any third party or any federal, state, local
or
foreign government or any court of competent jurisdiction, administrative agency
or commission or other governmental authority or instrumentality, domestic
or
foreign (“Governmental
Entity”)
under
any statutes, laws, ordinances, rules, regulations, orders, writs, injunctions,
judgments, or decrees (collectively, “Laws”);
(ii)
will not violate any Laws applicable to such Member and (iii) will not violate
or breach any contractual obligation to which such Member is a party.
SECTION
2.05. No
Finder’s Fee.
The
Member has not created any obligation for any finder’s, investment banker’s or
broker’s fee in connection with the Transactions.
SECTION
2.06. Entirely
for Own Account.
The
Parent Stock proposed to be acquired by the Member hereunder will be acquired
for investment for its own account, and not with a view to the resale or
distribution of any part thereof, and the Member has no present intention of
selling or otherwise distributing the Parent Stock, except in compliance with
applicable securities laws.
SECTION
2.07. Available
Information.
The
Member has such knowledge and experience in financial and business matters
that
it is capable of evaluating the merits and risks of investment in the
Parent.
SECTION
2.08. Non-Registration.
The
Member understands that the Parent Stock has not been registered under the
Securities Act of 1933, as amended (the “Securities
Act”)
and,
if issued in accordance with the provisions of this Agreement, will be issued
by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature
of
the investment intent and the accuracy of the Member’s representations as
expressed herein.
SECTION
2.09. Restricted
Securities.
The
Member understands that the Parent Stock is characterized as “restricted
securities” under the Securities Act inasmuch as this Agreement contemplates
that, if acquired by the Member pursuant hereto, the Parent Stock would be
acquired in a transaction not involving a public offering. The Member further
acknowledges that if the Parent Stock is issued to the Member in accordance
with
the provisions of this Agreement, such Parent Stock may not be resold without
registration under the Securities Act or the existence of an exemption
therefrom. In this connection, the Member represents that it is familiar with
Rule 144 promulgated under the Securities Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities
Act.
SECTION
2.10. Legends.
It is
understood that the Parent Stock will bear one or all of the following
legends:
(a) “THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144
OF
SUCH ACT.”
(b) Any
legend required by the “blue sky” laws of any state to the extent such laws are
applicable to the securities represented by the certificate so
legended.
ARTICLE
III
Representations
and Warranties of the Company
The
Company represents and warrants to the Parent that, except as set forth in
the
Company Disclosure Letter (and regardless of whether or not the Company
Disclosure Letter is referenced below with respect to any particular
representation or warranty), dated as of the date of this Agreement, from the
Company to the Parent and delivered to the Parent, relating to the Company
and
its subsidiaries (the “Company
Disclosure Letter”),
or in
the draft Current Report on Form 8-K of the Parent, which was prepared by the
Company and the Parent and will be filed with the U.S. Securities and Exchange
Commission (“SEC”)
on or
about the date hereof:
SECTION
3.01. Organization,
Standing and Power.
Each of
the Company and its subsidiaries (the “Company
Subsidiaries”)
is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the limited liability company
power and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to own, lease
or
otherwise hold its properties and assets and to conduct its businesses as
presently conducted, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the
aggregate, has not had and would not reasonably be expected to have a material
adverse effect on the Company, a material adverse effect on the ability of
the
Company to perform its obligations under this Agreement or on the ability of
the
Company to consummate the Transactions (a “Company
Material Adverse Effect”).
The
Company and each Company Subsidiary is duly qualified to do business in each
jurisdiction where the nature of its business or its ownership or leasing of
its
properties make such qualification necessary except where the failure to so
qualify would not reasonably be expected to have a Company Material Adverse
Effect. The Company has delivered to the Parent true and complete copies of
the
articles of formation and operating agreement of the Company and such other
constituent instruments of the Company as may exist, each as amended to the
date
of this Agreement (as so amended, the “Company
Constituent Instruments”),
and
the comparable articles of formation, operating agreements, charter,
organizational documents and other constituent instruments of each Company
Subsidiary, in each case as amended through the date of this Agreement.
SECTION
3.02. Company
Subsidiaries; Equity Interests.
(a) The
Company Disclosure Letter lists each Company Subsidiary and its jurisdiction
of
organization. Except as specified in the Company Disclosure Letter, all the
outstanding membership interests of each Company Subsidiary have been validly
issued and are fully paid and nonassessable and are as of the date of this
Agreement owned by the Company, by another Company Subsidiary or by the Company
and another Company Subsidiary, free and clear of all Liens.
(b) Except
for its interests in the Company Subsidiaries, the Company does not as of the
date of this Agreement own, directly or indirectly, any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any person.
SECTION
3.03. Capital
Structure.
The
authorized capital of the Company consists of the Units. Effective as of the
execution and Closing, of the transactions referenced by this Agreement, except
as set forth in the Company’s Constituent Instruments there are no Units, or
rights with respect thereto issued and outstanding or reserved for employees.
The issued and outstanding, Units have been duly authorized and validly issued,
are fully paid and nonassessable and were issued in compliance with all
applicable state and federal laws concerning, the issuance of securities. Except
as set forth in the Company Constituent Instruments, there are no outstanding,
rights, options, warrants, conversion rights, or agreements for the purchase
or
acquisition from the Company of any of its Units. Except as set forth in this
section 3.03 and in the Company Disclosure Letter, there are not any bonds,
debentures, notes or other indebtedness of Company or any Company Subsidiary
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which holders of Company Units
may
vote (“Voting
Company Debt”).
Except as set forth above, as of the date of this Agreement, there are not
any
options, warrants, rights, convertible or exchangeable securities, “phantom”
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which the
Company or any Company Subsidiary is a party or by which any of them is bound
(i) obligating the Company or any Company Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock
or
other equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in, the Company
or any Company Subsidiary or any Voting Company Debt, (ii) obligating the
Company or any Company Subsidiary to issue, grant, extend or enter into any
such
option, warrant, call, right, security, commitment, Contract, arrangement or
undertaking or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
occurring to holders of the capital stock of the Company or of any Company
Subsidiary. Except as set forth in the Company Disclosure Letter, as of the
date
of this Agreement, there are not any outstanding contractual obligations of
the
Company to repurchase, redeem or otherwise acquire any shares of capital stock
of Parent.
SECTION
3.04. Authority;
Execution and Delivery; Enforceability.
The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the Transactions. The execution and delivery
by
the Company of this Agreement and the consummation by the Company of the
Transactions have been duly authorized and approved by the Board of Directors
of
the Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the Transactions. When executed and
delivered, this Agreement will be enforceable against the Company in accordance
with its terms.
SECTION
3.05. No
Conflicts; Consents.
(a) Except
as
set forth in the Company Disclosure Letter, the execution and delivery by the
Company of this Agreement does not, and the consummation of the Transactions
and
compliance with the terms hereof and thereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of the Company
or any Company Subsidiary under, any provision of (i) the Company Constituent
Instruments or the comparable charter or organizational documents of any Company
Subsidiary, (ii) any material contract, lease, license, indenture, note, bond,
agreement, permit, concession, franchise or other instrument (a “Contract”)
to
which the Company or any Company Subsidiary is a party or by which any of their
respective properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 3.05(b), any material judgment, order
or
decree (“Judgment”)
or
material Law applicable to the Company or any Company Subsidiary or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii) above, any such items that, individually or in the aggregate, have not
had
and would not reasonably be expected to have a Company Material Adverse
Effect.
(b) Except
as
set forth in the Company Disclosure Letter and except for required filings
with
the SEC and applicable “Blue Sky” or state securities commissions, no material
consent, approval, license, permit, order or authorization (“Consent”)
of, or
registration, declaration or filing with, or permit from, any Governmental
Entity is required to be obtained or made by or with respect to the Company
or
any Company Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the
Transactions.
SECTION
3.06. Benefit
Plans.
(a) Except
as
set forth in the Company Disclosure Letter, the Company does not have or
maintain any collective bargaining agreement or any bonus, pension, profit
sharing, deferred compensation, incentive compensation, equity ownership, equity
purchase, option, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan, arrangement or
understanding (whether or not legally binding) providing benefits to any current
or former employee, officer or director of the Company or any Company Subsidiary
(collectively, “Company
Benefit Plans”).
Except as set forth in the Company Disclosure Letter, as of the date of this
Agreement there are not any severance or termination agreements or arrangements
between the Company or any Company Subsidiary and any current or former
employee, officer or director of the Company or any Company Subsidiary, nor
does
the Company or any Company Subsidiary have any general severance plan or
policy.
(b) Since
March 31, 2006, there has not been any adoption or amendment in any material
respect by the Company or any Company Subsidiary of any Company Benefit
Plan.
SECTION
3.07. Litigation.
There
are no suits, actions or proceedings pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary that,
individually or in the aggregate, would reasonably be expected to have a Company
Material Adverse Effect, nor is there any Judgment outstanding against the
Company or any Company Subsidiary.
SECTION
3.08. Compliance
with Applicable Laws.
The
Company and the Company Subsidiaries are in compliance with all applicable
Laws,
including those relating to occupational health and safety and the environment,
except for instances of noncompliance that, individually and in the aggregate,
have not had and would not reasonably be expected to have a Company Material
Adverse Effect. Except as set forth in the Company Disclosure Letter, the
Company has not received any written communication during the past two years
from a Governmental Entity that alleges that the Company is not in compliance
in
any material respect with any applicable Law. This Section 3.09 does not relate
to matters with respect to Taxes, which are the subject of Section
3.06.
SECTION
3.09. Brokers;
Schedule of Fees and Expenses.
No
broker, investment banker, financial advisor or other person is entitled to
any
broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the Transactions based upon arrangements made by or on behalf
of
the Company.
SECTION
3.10. Contracts.
Except
as disclosed in the Company Disclosure Letter, there are no Contracts that
are
material to the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company and its
subsidiaries taken as a whole. Neither the Company nor any Company Subsidiary
is
in violation of or in default under (nor does there exist any condition which
upon the passage of time or the giving of notice would cause such a violation
of
or default under) any Contract to which it is a party or by which it or any
of
its properties or assets is bound, except for violations or defaults that would
not, individually or in the aggregate, reasonably be expected to result in
a
Company Material Adverse Effect.
SECTION
3.11. Title
to Properties.
Except
as set forth in the Disclosure Letter, the Company and the Company Subsidiaries
do not own any real property. Each of the Company and the Company Subsidiaries
has sufficient title to, or valid leasehold interests in, all of its properties
and assets used in the conduct of its businesses. All such assets and
properties, other than assets and properties in which the Company or any of
the
Company Subsidiaries has leasehold interests, are free and clear of all Liens
other than those set forth in the Company Disclosure Letter and except for
Liens
that, in the aggregate, do not and will not materially interfere with the
ability of the Company and the Company Subsidiaries to conduct business as
currently conducted.
SECTION
3.12. Intellectual
Property.
The
Company and the Company Subsidiaries own, or are validly licensed or otherwise
have the right to use, all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, service marks, service xxxx rights, copyrights
and other proprietary intellectual property rights and computer programs
(collectively, “Intellectual
Property Rights”)
which
are material to the conduct of the business of the Company and the Company
Subsidiaries taken as a whole. The Company Disclosure Letter sets forth a
description of all Intellectual Property Rights which are material to the
conduct of the business of the Company and the Company Subsidiaries taken as
a
whole. There are no claims pending or, to the knowledge of the Company,
threatened that the Company or any of the Company Subsidiaries is infringing
or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right. To the knowledge of the Company, no person is
infringing the rights of the Company or any of the Company Subsidiaries with
respect to any Intellectual Property Right.
SECTION
3.13. Labor
Matters.
There
are no collective bargaining or other labor union agreements to which the
Company or any of the Company Subsidiaries is a party or by which any of them
is
bound.
SECTION
3.14. Financial
Statements.
The
Company has delivered to the Parent its audited consolidated financial
statements for the fiscal years ended December 31, 2005 and 2004 and unaudited
financial statements for the six month period ended June 30, 2006 (collectively,
the “Company
Financial Statements”).
The
Company Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated. The Company Financial Statements fairly present in all
material respects the financial condition and operating results of the Company,
as of the dates, and for the periods, indicated therein. The Company does not
have any material liabilities or obligations, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent
to [June 30, 2006], and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in the Company Financial
Statements, which, in both cases, individually and in the aggregate would not
be
reasonably likely to have a Company Material Adverse Effect.
SECTION
3.15. Insurance.
The
Company and its subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and its subsidiaries are
engaged and in the geographic areas where they engage in such businesses. The
Company has no reason to believe that it will not be able to renew its and its
subsidiaries’ existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to continue
its business on terms consistent with market for the Company’s and such
subsidiaries’ respective lines of business.
SECTION
3.16. Transactions
With Affiliates and Employees.
Except
as set forth in the Company Disclosure Letter and Company Financial Statements,
none of the officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company is presently a party to any
transaction with the Company or any subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has
a
substantial interest or is an officer, director, trustee or
partner.
SECTION
3.17. Internal
Accounting Controls.
The
Company and its subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures
for
the Company and designed such disclosure controls and procedures to ensure
that
material information relating to the Company, including its subsidiaries, is
made known to the officers by others within those entities. The Company's
officers have evaluated the effectiveness of the Company's controls and
procedures. Since December 31, 2005, there have been no significant changes
in
the Company’s internal controls or, to the Company's knowledge, in other factors
that could significantly affect the Company's internal controls.
SECTION
3.18. Solvency.
Based
on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company's fair saleable value
of
its assets exceeds the amount that will be required to be paid on or in respect
of the Company's existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company's assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate
all
of its assets, after taking into account all anticipated uses of the cash,
would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond
its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
SECTION
3.19. Application
of Takeover Protections.
The
Company has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including
any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company's charter documents or the laws of its state of incorporation
that is or could become applicable to the Members as a result of the Members
and
the Company fulfilling their obligations or exercising their rights under this
Agreement.
SECTION
3.20. No
Additional Agreements.
The
Company does not have any agreement or understanding with any Members with
respect to the transactions contemplated by this Agreement other than as
specified in this Agreement.
SECTION
3.21. Investment
Company.
The
Company is not, and is not an affiliate of, and immediately following the
Closing will not have become, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
SECTION
3.22. Disclosure.
The
Company confirms that neither it nor any person acting on its behalf has
provided any Member or its respective agents or counsel with any information
that the Company believes constitutes material, non-public information except
insofar as the existence and terms of the proposed transactions hereunder may
constitute such information and
except for information that will be disclosed by the Parent under a current
report on Form 8-K filed within one business days after the Closing.
The
Company understands and confirms that the Members will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure provided to the Members regarding the Company, its
business and the transactions contemplated hereby, furnished by or on behalf
of
the Company (including the Company’s representations and warranties set forth in
this Agreement) are true and correct and do not contain any untrue statement
of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were
made, not misleading.
SECTION
3.23. Information
Supplied.
None of
the information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the notice that is required to be sent to the
stockholders of the Parent pursuant to Rule 14f-1 (the “14f-1
Notice”)
promulgated under the Securities Exchange Act of 1934 (the “Exchange
Act”)
will,
at the date it is first mailed to the Parent’s stockholders, contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they are made, not misleading.
SECTION
3.24. Absence
of Certain Changes or Events.
Except
as disclosed in the Company Financial Statements or in the Company Disclosure
Letter, from June 30,2006 to the date of this Agreement, the Company has
conducted its business only in the ordinary course, and during such period
there
has not been:
(a) any
change in the assets, liabilities, financial condition or operating results
of
the Company or any Company Subsidiary, except changes in the ordinary course
of
business that have not caused, in the aggregate, a Company Material Adverse
Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance, that would
have a Company Material Adverse Effect;
(c) any
waiver or compromise by the Company or any Company Subsidiary of a valuable
right or of a material debt owed to it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or payment of
any
obligation by the Company or any Company Subsidiary, except in the ordinary
course of business and the satisfaction or discharge of which would not have
a
Company Material Adverse Effect;
(e) any
material change to a material Contract by which the Company or any Company
Subsidiary or any of its respective assets is bound or subject;
(f) any
mortgage, pledge, transfer of a security interest in, or lien, created by the
Company or any Company Subsidiary, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable and liens
that arise in the ordinary course of business and do not materially impair
the
Company’s or such Company Subsidiary’s ownership or use of such property or
assets;
(g) any
loans
or guarantees made by the Company or any Company Subsidiary to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(h) any
alteration of the Company’s method of accounting or the identity of its
auditors;
(i) any
declaration or payment of dividend or distribution of cash or other property
to
Members or any purchase, redemption or agreements to purchase or redeem any
shares of Company Units;
(j) any
issuance of equity securities to any officer, director or affiliate, except
pursuant to existing Company Unit plans; or
(k) any
arrangement or commitment by the Company or any Company Subsidiary to do any
of
the things described in this Section 3.24.
ARTICLE
IV
Representations
and Warranties of the Parent
The
Parent represents and warrants as follows to each of the Members and the Company
that, except as set forth in the reports, schedules, forms, statements and
other
documents filed by Parent with the SEC and publicly available prior to the
date
of the Agreement (the “Filed
Parent SEC Documents”)
or in
the letter, dated as of the date of this Agreement, from Parent to the Company
and the Members (the “Parent
Disclosure Letter”):
SECTION
4.01. Organization,
Standing and Power.
Parent
is duly organized, validly existing and in good standing under the laws of
the
State of Nevada and has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a material adverse effect on Parent, a material adverse effect
on the ability of Parent to perform its obligations under this Agreement or
on
the ability of Parent to consummate the Transactions (a “Parent
Material Adverse Effect”).
Parent is duly qualified to do business in each jurisdiction where the nature
of
its business or their ownership or leasing of its properties make such
qualification necessary and where the failure to so qualify would reasonably
be
expected to have a Parent Material Adverse Effect. Parent has delivered to
the
Company true and complete copies of the articles of incorporation of Parent,
as
amended to the date of this Agreement (as so amended, the “Parent
Charter”),
and
the Bylaws of Parent, as amended to the date of this Agreement (as so amended,
the “Parent
Bylaws”).
SECTION
4.02. Subsidiaries;
Equity Interests.
Parent
does not own, directly or indirectly, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
person.
SECTION
4.03. Capital
Structure.
The
authorized capital stock of Parent consists of 100,000,000 shares of Parent
Common Stock par value $0.001 per share, and 10,000,000 shares of preferred
stock, par value $0.001 per share. As of the date hereof (i) 1,388,285 shares
of
Parent Common Stock are issued and outstanding, (ii) no shares of preferred
stock are outstanding and (iii) no shares of Parent Common Stock or preferred
stock are held by Parent in its treasury. Except as set forth above, no shares
of capital stock or other voting securities of Parent were issued, reserved
for
issuance or outstanding. All outstanding shares of the capital stock of Parent
are, and all such shares that may be issued prior to the date hereof will be
when issued, duly authorized, validly issued, fully paid and nonassessable
and
not subject to or issued in violation of any purchase option, call option,
right
of first refusal, preemptive right, subscription right or any similar right
under any provision of the General Corporation Law of the State of Nevada,
the
Parent Charter, the Parent Bylaws or any Contract to which Parent is a party
or
otherwise bound. 1,371,000 of the outstanding 1,388,285 shares of the Parent’s
Common Stock are restricted stock, of which 1,346,000 shares are held by
affiliates of the Parent and constitute control stock. The remaining 17,285
shares of Parent Common Stock are free-trading shares and may be resold without
restriction. There are not any bonds, debentures, notes or other indebtedness
of
Parent having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of Parent
Common Stock may vote (“Voting
Parent Debt”).
Except as set forth above, as of the date of this Agreement, there are not
any
options, warrants, rights, convertible or exchangeable securities, “phantom”
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which Parent
is a party or by which any of them is bound (i) obligating Parent to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of
capital stock or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in, Parent or any Voting Parent Debt, (ii) obligating Parent to issue,
grant, extend or enter into any such option, warrant, call, right, security,
commitment, Contract, arrangement or undertaking or (iii) that give any person
the right to receive any economic benefit or right similar to or derived from
the economic benefits and rights occurring to holders of the capital stock
of
the Parent. As of the date of this Agreement, there are not any outstanding
contractual obligations of Parent to repurchase, redeem or otherwise acquire
any
shares of capital stock of Parent. Except as otherwise provided for below or
otherwise disclosed in the Parent Disclosure letter, the Parent is not a party
to any agreement granting any security holder of the Parent the right to cause
the Parent to register shares of the capital stock or other securities of the
Parent held by such security holder under the Securities Act. The stockholder
list provided to the Company is a current shareholder list generated by its
stock transfer agent, and such list accurately reflects all of the issued and
outstanding shares of the Parent’s Common Stock.
SECTION
4.04. Authority;
Execution and Delivery; Enforceability.
The
execution and delivery by the Parent of this Agreement and the consummation
by
the Parent of the Transactions have been duly authorized and approved by the
Board of Directors of the Parent and no other corporate proceedings on the
part
of the Parent are necessary to authorize this Agreement and the Transactions.
This Agreement constitutes a legal, valid and binding obligation of the Parent,
enforceable against the Parent in accordance with the terms hereof.
SECTION
4.05. No
Conflicts; Consents.
(a) Except
as
set forth in the Parent Disclosure Letter, the execution and delivery by Parent
of this Agreement, does not, and the consummation of Transactions and compliance
with the terms hereof and thereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of
any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien upon any of the properties or
assets of Parent under, any provision of (i) Parent Charter or Parent Bylaws,
(ii) any material Contract to which Parent is a party or by which any of its
properties or assets is bound or (iii) subject to the filings and other matters
referred to in Section 4.05(b), any material Judgment or material Law applicable
to Parent or its properties or assets, other than, in the case of clauses (ii)
and (iii) above, any such items that, individually or in the aggregate, have
not
had and would not reasonably be expected to have a Parent Material Adverse
Effect.
(b) No
Consent of, or registration, declaration or filing with, or permit from, any
Governmental Entity is required to be obtained or made by or with respect to
Parent in connection with the execution, delivery and performance of this
Agreement or the consummation of the Transactions, other than the (A) filing
with the SEC of 14f-1 Notice and (B) filing with the SEC of reports under
Sections 13 and 16 of the Exchange Act, and (C) filings under state “blue sky”
laws, as may be required in connection with this Agreement and the
Transactions.
SECTION
4.06. SEC
Documents; Undisclosed Liabilities.
(a) Parent
has filed all reports, schedules, forms, statements and other documents required
to be filed by Parent with the SEC since January 1, 2004, pursuant to Sections
13(a), 14 (a) and 15(d) of the Exchange Act (the “Parent
SEC Documents”).
(b) As
of its
respective filing date, each Parent SEC Document complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to such Parent SEC Document, and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any Parent
SEC Document has been revised or superseded by a later filed Parent SEC
Document, none of the Parent SEC Documents contains any untrue statement of
a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of Parent included in the Parent SEC Documents comply
as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited statements,
as permitted by the rules and regulations of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of Parent and
its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods shown (subject,
in
the case of unaudited statements, to normal year-end audit
adjustments).
(c) Except
as
set forth in the Filed Parent SEC Documents, Parent has no liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a balance sheet of Parent or in the notes
thereto. The Parent Disclosure Letter sets forth all financial and contractual
obligations and liabilities (including any obligations to issue capital stock
or
other securities of the parent) due after the date hereof. As of the date hereof
the Parent has total liabilities of less than $5,000, all of which liabilities
shall be paid off at or prior to the Closing and shall in no event remain
liabilities of the Parent, the Company or the Members following the
Closing.
SECTION
4.07. Information
Supplied.
None of
the information supplied or to be supplied by Parent for inclusion or
incorporation by reference in the 14f-1 Notice will, at the date it is first
mailed to the Parent’s stockholders, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
SECTION
4.08. Absence
of Certain Changes or Events.
Except
as disclosed in the Filed Parent SEC Documents or in the Parent Disclosure
Letter, from the date of the most recent audited financial statements included
in the Filed Parent SEC Documents to the date of this Agreement, Parent has
conducted its business only in the ordinary course, and during such period
there
has not been:
(a) any
change in the assets, liabilities, financial condition or operating results
of
the Parent from that reflected in the Parent SEC Documents, except changes
in
the ordinary course of business that have not caused, in the aggregate, a Parent
Material Adverse Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance, that would
have a Parent Material Adverse Effect;
(c) any
waiver or compromise by the Parent of a valuable right or of a material debt
owed to it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or payment of
any
obligation by the Parent, except in the ordinary course of business and the
satisfaction or discharge of which would not have a Parent Material Adverse
Effect;
(e) any
material change to a material Contract by which the Parent or any of its assets
is bound or subject;
(f) any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder;
(g) any
resignation or termination of employment of any officer of the Parent;
(h) any
mortgage, pledge, transfer of a security interest in, or lien, created by the
Parent, with respect to any of its material properties or assets, except liens
for taxes not yet due or payable and liens that arise in the ordinary course
of
business and do not materially impair the Parent’s ownership or use of such
property or assets;
(i) any
loans
or guarantees made by the Parent to or for the benefit of its employees,
officers or directors, or any members of their immediate families, other than
travel advances and other advances made in the ordinary course of its
business;
(j) any
declaration, setting aside or payment or other distribution in respect of any
of
the Parent’s capital stock, or any direct or indirect redemption, purchase, or
other acquisition of any of such stock by the Parent; or
(k) any
alteration of the Parent’s method of accounting or the identity of its auditors;
or
(l) any
issuance of equity securities to any officer, director or affiliate, except
pursuant to existing Parent stock option plans; or
(m) any
arrangement or commitment by the Parent to do any of the things described in
this Section 4.08.
SECTION
4.09. Taxes.
(a) Parent
has timely filed, or has caused to be timely filed on its behalf, all Tax
Returns required to be filed by it, and all such Tax Returns are true, complete
and accurate, except to the extent any failure to file or any inaccuracies
in
any filed Tax Returns, individually or in the aggregate, have not had and would
not reasonably be expected to have a Parent Material Adverse Effect. All Taxes
shown to be due on such Tax Returns, or otherwise owed, has been timely paid,
except to the extent that any failure to pay, individually or in the aggregate,
has not had and would not reasonably be expected to have a Parent Material
Adverse Effect.
(b) The
most
recent financial statements contained in the Filed Parent SEC Documents reflect
an adequate reserve for all Taxes payable by Parent (in addition to any reserve
for deferred Taxes to reflect timing differences between book and Tax items)
for
all Taxable periods and portions thereof through the date of such financial
statements. No deficiency with respect to any Taxes has been proposed, asserted
or assessed against Parent, and no requests for waivers of the time to assess
any such Taxes are pending, except to the extent any such deficiency or request
for waiver, individually or in the aggregate, has not had and would not
reasonably be expected to have a Parent Material Adverse Effect.
(c) There
are
no Liens for Taxes (other than for current Taxes not yet due and payable) on
the
assets of Parent. Parent is not bound by any agreement with respect to
Taxes.
“Taxes”
includes all forms of taxation, whenever created or imposed, and whether of
the
United States or elsewhere, and whether imposed by a local, municipal,
governmental, state, foreign, federal or other Governmental Entity, or in
connection with any agreement with respect to Taxes, including all interest,
penalties and additions imposed with respect to such amounts.
“Tax
Return”
means
all federal, state, local, provincial and foreign Tax returns, declarations,
statements, reports, schedules, forms and information returns and any amended
Tax return relating to Taxes.
SECTION
4.10. Absence
of Changes in Benefit Plans.
From
the date of the most recent audited financial statements included in the Filed
Parent SEC Documents to the date of this Agreement, there has not been any
adoption or amendment in any material respect by Parent of any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of Parent (collectively, “Parent
Benefit Plans”).
As of
the date of this Agreement there are not any employment, consulting,
indemnification, severance or termination agreements or arrangements between
the
Parent and any current or former employee, officer or director of the Parent,
nor does the Parent have any general severance plan or policy.
SECTION
4.11. ERISA
Compliance; Excess Parachute Payments.
The
Parent does not, and since its inception never has, maintained, or contributed
to any “employee pension benefit plans” (as defined in Section 3(2) of ERISA),
“employee welfare benefit plans” (as defined in Section 3(1) of ERISA) or any
other Parent Benefit Plan for the benefit of any current or former employees,
consultants, officers or directors of Parent.
SECTION
4.12. Litigation.
Except
as disclosed in the Filed Parent SEC Documents or in the Parent Disclosure
Letter, there is no suit, action or proceeding pending or, to the knowledge
of
Parent, threatened against or affecting Parent (and Parent is not aware of
any
basis for any such suit, action or proceeding) that, individually or in the
aggregate, has had or would reasonably be expected to have a Parent Material
Adverse Effect, nor is there any Judgment outstanding against Parent that has
had or would reasonably be expected to have a Parent Material Adverse
Effect.
SECTION
4.13. Compliance
with Applicable Laws.
Except
as disclosed in the Filed Parent SEC Documents or in the Parent Disclosure
Letter, Parent is in compliance with all applicable Laws, including those
relating to occupational health and safety and the environment, except for
instances of noncompliance that, individually and in the aggregate, have not
had
and would not reasonably be expected to have a Parent Material Adverse Effect.
Except as set forth in the Filed Parent SEC Documents or in the Parent
Disclosure Letter, Parent has not received any written communication during
the
past two years from a Governmental Entity that alleges that Parent is not in
compliance in any material respect with any applicable Law. This Section 4.13
does not relate to matters with respect to Taxes, which are the subject of
Section 4.09.
SECTION
4.14. Contracts.
Except
as disclosed in the Parent Filed SEC Documents, there are no Contracts that
are
material to the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Parent taken as a whole.
Parent is not in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice would cause
such a violation of or default under) any Contract to which it is a party or
by
which it or any of its properties or assets is bound, except for violations
or
defaults that would not, individually or in the aggregate, reasonably be
expected to result in a Parent Material Adverse Effect.
SECTION
4.15. Title
to Properties.
Parent
has good title to, or valid leasehold interests in, all of its properties and
assets used in the conduct of its businesses. All such assets and properties,
other than assets and properties in which the Parent has leasehold interests,
are free and clear of all Liens other than those set forth in the Parent
Disclosure Letter and except for Liens that, in the aggregate, do not and will
not materially interfere with the ability of the Parent to conduct business
as
currently conducted. Parent has complied in all material respects with the
terms
of all material leases to which it is a party and under which it is in
occupancy, and all such leases are in full force and effect. Parent enjoys
peaceful and undisturbed possession under all such material leases.
SECTION
4.16. Intellectual
Property.
Parent
owns, or is validly licensed or otherwise has the right to use, all Intellectual
Property Rights which are material to the conduct of the business of the Parent
taken as a whole. The Parent Disclosure Letter sets forth a description of
all
Intellectual Property Rights which are material to the conduct of the business
of the Parent taken as a whole. Except as set forth in the Parent Disclosure
Letter no claims are pending or, to the knowledge of the Parent, threatened
that
the Parent is infringing or otherwise adversely affecting the rights of any
person with regard to any Intellectual Property Right. To the knowledge of
the
Parent, no person is infringing the rights of the Parent with respect to any
Intellectual Property Right.
SECTION
4.17. Labor
Matters.
There
are no collective bargaining or other labor union agreements to which the Parent
is a party or by which it is bound.
SECTION
4.18. Market
Makers.
The
Parent has at least two market makers for its common shares and such market
makers have obtained all permits and made all filings necessary in order for
such market makers to continue as market makers of the Parent.
SECTION
4.19. Transactions
With Affiliates and Employees.
Except
as set forth in the Filed Parent SEC Documents and Parent Disclosure Letter,
none of the officers or directors of the Parent and, to the knowledge of the
Parent, none of the employees of the Parent is presently a party to any
transaction with the Parent or any subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Parent, any entity in which any officer, director, or any such employee has
a
substantial interest or is an officer, director, trustee or
partner.
SECTION
4.20. Internal
Accounting Controls.
The
Parent maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets
is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Parent has established disclosure
controls and procedures for the Parent and designed such disclosure controls
and
procedures to ensure that material information relating to the Parent is made
known to the officers by others within those entities. The Parent's officers
have evaluated the effectiveness of the Parent's controls and procedures. Since
December 31, 2005, there have been no significant changes in the Parent’s
internal controls or, to the Parent's knowledge, in other factors that could
significantly affect the Parent's internal controls.
SECTION
4.21. Solvency.
Based
on the financial condition of the Parent
as of
the Closing Date (and assuming that the Closing shall have occurred), (i) the
Parent's fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Parent's existing debts and other
liabilities (including known contingent liabilities) as they mature, (ii) the
Parent's assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Parent, and projected capital
requirements and capital availability thereof, and (iii) the current cash flow
of the Parent, together with the proceeds the Parent would receive, were it
to
liquidate all of its assets, after taking into account all anticipated uses
of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Parent does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its
debt).
SECTION
4.22. Application
of Takeover Protections.
The
Parent has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including
any
distribution under a rights agreement) or other similar anti-takeover provision
under the Parent's charter documents or the laws of its state of incorporation
that is or could become applicable to the Members as a result of the Members
and
the Parent fulfilling their obligations or exercising their rights under this
Agreement.
SECTION
4.23. No
Additional Agreements.
The
Parent does not have any agreement or understanding with the Members with
respect to the transactions contemplated by this Agreement other than as
specified in this Agreement.
SECTION
4.24. Investment
Company.
The
Parent is not, and is not an affiliate of, and immediately following the Closing
will not have become, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
SECTION
4.25. Disclosure.
The
Parent confirms that neither it nor any person acting on its behalf has provided
any Member or its respective agents or counsel with any information that the
Parent believes constitutes material, non-public information except insofar
as
the existence and terms of the proposed transactions hereunder may constitute
such information and except for information that will be disclosed by the Parent
under a current report on Form 8-K filed within one business days after the
Closing. The Parent understands and confirms that the Members will rely on
the
foregoing representations and covenants in effecting transactions in securities
of the Parent. All disclosure provided to the Members regarding the Parent,
its
business and the transactions contemplated hereby, furnished by or on behalf
of
the Parent (including the Parent’s representations and warranties set forth in
this Agreement) are true and correct and do not contain any untrue statement
of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were
made, not misleading.
SECTION
4.26. Certain
Registration Matters.
Except
as specified in the Parent Disclosure Letter and Filed Parent SEC Documents
and
except for registration rights granted to affiliates of Xxxxxxx Xxxxxx and
Pennaluna & Co., the Parent has not granted or agreed to grant to any person
any rights (including "piggy-back" registration rights) to have any securities
of the Parent registered with the SEC or any other governmental authority that
have not been satisfied.
SECTION
4.27. Listing
and Maintenance Requirements.
The
Parent is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with the listing and maintenance
requirements for continued listing of the Parent Stock on the trading market
on
which the Parent
Stock are
currently listed or quoted. The issuance and sale of the Shares under this
Agreement does not contravene the rules and regulations of the trading market
on
which the Parent Stock are currently listed or quoted, and no approval of the
stockholders of the Parent is required for the Parent to issue and deliver
to
the Members the Shares contemplated by this Agreement.
ARTICLE
V
Deliveries
SECTION
5.01. Deliveries
of the Members.
(a) Concurrently
herewith each Member is delivering to the Parent this Agreement executed by
the
Member.
(b) At
or
prior to the Closing, each Member shall deliver to the Parent:
(i) certificates,
if any, representing its Company Units; and
(ii) if
Units
are certificated, duly executed stock powers for transfer by the Member of
its
Company Units to the Parent.
SECTION
5.02. Deliveries
of the Parent.
(a) Concurrently
herewith, the Parent is delivering:
(i) to
each
Member and to the Company, a copy of this Agreement executed by
Parent;
(ii) to
the
Company, a certificate from the Parent, signed by its Secretary or Assistant
Secretary certifying that the attached copies of the Parent Charter, Parent
Bylaws and resolutions of the Board of Directors of the Parent approving the
Agreement and the Transactions are all true, complete and correct and remain
in
full force and effect;
(iii) to
the
Company, a letter of resignation of Xxxxxxx Xxxxxx from all offices he holds
with the Parent effective upon the Closing and from his position as a director
of the Parent that will become effective upon the
10th
day
following the mailing by the Parent to its stockholders the 14f-1
Notice;
(iv) to
the
Company, evidence of the election of Xxxxxxx Xxxxxx, as a director and as
Chairman of the Board of Directors of the Parent effective upon execution of
this Agreement by the Parent;
(v) to
the
Company, evidence of the election of Xxxxxxx X. Xxxxxx, as Chief Executive
Officer and President of the Parent, Xxxx Xxxx as the Treasurer and Chief
Financial Officer of the Parent, Xxxxxxx X. Xxxxxx as the Executive Vice
President/Business Development of the Parent, and Xxxxxx Xxxxxx, as the
Executive Vice President/Risk Management of the Parent, effective upon execution
of this Agreement by the Parent;
(vi) to
the
Company, such pay-off letters and releases relating to liabilities as the
Company shall request and such pay-off letters and releases shall be in form
and
substance satisfactory to the Company; and
(vii) to
the
Company the results of UCC, judgment lien and tax lien searches with respect
to
the Parent, the results of which indicate no liens on the assets of the
Parent.
(b) At
or
immediately after the Closing, the Parent shall deliver to each Member,
certificates representing the new shares of Parent Common Stock issued to such
Member as set forth on Exhibit
A
SECTION
5.03. Deliveries
of the Company.
(a) Concurrently
herewith, the Company is delivering to the Parent:
(i) this
Agreement executed by Company; and
(ii) a
certificate from the Company, signed by its authorized officer certifying that
the attached copies of the Company Constituent Instruments and resolutions
of
the Board of Directors of the Company approving the Agreement and the
Transactions are all true, complete and correct and remain in full force and
effect.
ARTICLE
VI
Conditions
to Closing
SECTION
6.01. Member
and Company Conditions Precedent.
The
obligations of the Members and the Company to enter into and complete the
Closing is subject, at the option of the Members and the Company, to the
fulfillment on or prior to the Closing Date of the following conditions.
(a) Representations
and Covenants.
The
representations and warranties of the Parent contained in this Agreement shall
be true in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date. The Parent shall
have performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Parent on or prior to the Closing Date. The Parent shall have delivered to
the
Company, if requested, a certificate, dated the Closing Date, to the foregoing
effect.
(b) Litigation.
No
action, suit or proceeding shall have been instituted before any court or
governmental or regulatory body or instituted or threatened by any governmental
or regulatory body to restrain, modify or prevent the carrying out of the
Transactions or to seek damages or a discovery order in connection with such
Transactions, or which has or may have, in the reasonable opinion of the
Company, a materially adverse effect on the assets, properties, business,
operations or condition (financial or otherwise) of the Parent.
(c) No
Material Adverse Change.
There
shall not have been any occurrence, event, incident, action, failure to act,
or
transaction since December 31, 2005 which has had or is reasonably likely to
cause a Parent Material Adverse Effect.
(d) SEC
Reports.
The
Parent shall have filed all reports and other documents required to be filed
by
Parent under the U.S. federal securities laws through the Closing
Date.
(e) OTCBB
Quotation.
The
Parent shall have maintained its status as a Company whose common stock is
quoted on the Over-the-Counter Bulletin Board and no reason shall exist as
to
why such status shall not continue immediately following the
Closing.
(f) Issuance
of Warrants.
Each of
the Members’ who previously was a holder of units in Gateway Holdco, LLC (a
“Gateway Member”) shall have been issued a Warrant in the form of Exhibit
B
to this
Agreement for the purchase of the number of shares of Parent Stock equal to
the
quotient of (i) twenty percent (20%) of such Gateway Member’s original
investment in Gateway Holdco, LLC, divided by the price paid by investors for
shares of the Parent Common Stock in the next equity financing round in which
the Parent receives proceeds of at least $20 million.
(g) Make
Whole Agreement.
Each of
the Gateway Members and each Member who previously was a holder of units in
Orion Development, LLC (an “Orion Development Member”) shall have entered the
Make Whole Agreement in the form of Exhibit C, (annexed hereto) pursuant to
which the Orion Development Members are obligated to transfer to the Gateway
Members a number of Shares, such that, in the aggregate, following such
transfer, the Gateway Members will own 62.09% of the issued and outstanding
capital stock of the Parent, if the Parent does
not
consummate an equity financing transaction in which the Parent receives gross
proceeds of at least $20 million (the
“PIPE”)
on or
before July 31, 2007.
(h) Deliveries.
The
deliveries specified in Section 5.02 shall have been made by the Parent.
SECTION
6.02. Parent
Conditions Precedent.
The
obligations of the Parent to enter into and complete the Closing is subject,
at
the option of the Parent, to the fulfillment on or prior to the Closing Date
of
the following conditions, any one or more of which may be waived by the Parent
in writing.
(a) Representations
and Covenants.
The
representations and warranties of the Members and the Company contained in
this
Agreement shall be true in all material respects on and as of the Closing Date
with the same force and effect as though made on and as of the Closing Date.
The
Members and the Company shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by the Members and the Company on or prior to the
Closing Date. The Company shall have delivered to the Parent, if requested,
a
certificate, dated the Closing Date, to the foregoing effect.
(b) Litigation.
No
action, suit or proceeding shall have been instituted before any court or
governmental or regulatory body or instituted or threatened by any governmental
or regulatory body to restrain, modify or prevent the carrying out of the
Transactions or to seek damages or a discovery order in connection with such
Transactions, or which has or may have, in the reasonable opinion of the Parent,
a materially adverse effect on the assets, properties, business, operations
or
condition (financial or otherwise) of the Parent.
(c) No
Material Adverse Change.
There
shall not have been any occurrence, event, incident, action, failure to act,
or
transaction since December 31, 2005 which has had or is reasonably likely to
cause a Company Material Adverse Effect.
(d) Deliveries.
The
deliveries specified in Section 5.01 and Section 5.03 shall have been made
by
the Members and the Company, respectively.
(e) Audited
Financial Statements and Form 10 Disclosure.
The
Company shall have provided the Parent with reasonable assurances that the
Parent will be able to comply with its obligation to file a current report
on
Form 8-K within one (1) business days following the Closing containing the
requisite audited consolidated financial statements of the Company and the
requisite Form 10-type disclosure regarding the Company.
(f) Post-Closing
Capitalization.
At, and
immediately after, the Closing, the authorized capitalization, and the number
of
issued and outstanding membership interests of the Company and shares of the
capital stock of the Parent, on a fully-diluted basis issued in exchange
therefor, shall be as specified in Exhibit A.
(g) No
Suspensions of Trading in Parent Stock; Listing.
Trading
in the Parent Stock shall not have been suspended by the SEC or any trading
market (except for any suspensions of trading of not more than one trading
day
solely to permit dissemination of material information regarding the Parent)
at
any time since the date of execution of this Agreement, and the Parent Stock
shall have been at all times since such date listed for trading on a trading
market.
ARTICLE
VII
Covenants
SECTION
7.01. Preparation
of the 14f-1 Notice; Blue Sky Laws.
(a) As
soon
as possible following the date of this Agreement and in any event, within two
business days hereafter, the Company and Parent shall prepare and file with
the
SEC the 14f-1 Notice in connection with the consummation of this Agreement.
The
Parent shall cause the 14f-1 Notice to be mailed to the Parent’s stockholders as
promptly as practicable thereafter.
(b) Parent
shall take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified) required to be taken under any applicable
state securities laws in connection with the issuance of Parent Stock in
connection with this Agreement.
SECTION
7.02. Public
Announcements.
Parent
and the Company will consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any press release or other
public statements with respect to the Agreement and the Transactions and shall
not issue any such press release or make any such public statement prior to
such
consultation, except as may be required by applicable Law, court process or
by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION
7.03. Fees
and Expenses.
All
fees and expenses incurred in connection with this Agreement shall be paid
by
the party incurring such fees or expenses, whether or not this Agreement is
consummated.
SECTION
7.04. Continued
Efforts.
Each
party hereto shall use commercially reasonable efforts to (a) take all
action reasonably necessary to consummate the Transactions, and (b) take
such steps and do such acts as may be necessary to keep all of its
representations and warranties true and correct as of the Closing Date with
the
same effect as if the same had been made, and this Agreement had been dated,
as
of the Closing Date.
SECTION
7.05. Conduct
of Business.
During
the period from the date hereof through the Closing Date, Parent and the Company
shall carry on their respective businesses in the ordinary and usual course
consistent with past practice.
SECTION
7.06. Exclusivity.
The
Parent shall not (i) solicit, initiate, or encourage the submission of any
proposal or offer from any person relating to the acquisition of any capital
stock or other voting securities of the Parent, or any assets of the Parent
(including any acquisition structured as a merger, consolidation, share exchange
or other business combination), (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by
any
person to do or seek any of the foregoing, or (iii) take any other action that
is inconsistent with the Transactions and that has the effect of avoiding the
Closing contemplated hereby. The Parent shall notify the Company immediately
if
any person makes any proposal, offer, inquiry, or contact with respect to any
of
the foregoing.
SECTION
7.07. Filing
of 8-K.
Parent
shall, and the Members shall cause the Parent to, file, within one business
days
of the Closing Date, a current report on Form 8-K with the SEC disclosing the
terms of this Agreement and other requisite disclosure regarding the
Transactions and including the requisite audited consolidated financial
statements of the Company and the requisite Form 10 disclosure regarding the
Company.
SECTION
7.08. Furnishing
of Information.
As long
as any Member owns the Shares, the Parent covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period)
all
reports required to be filed by the Parent after the date hereof pursuant to
the
Exchange Act. As long as any Member owns Shares, if the Parent is not required
to file reports pursuant to such laws, it will prepare and furnish to the
Members and make publicly available in accordance with Rule 144(c) promulgated
by the SEC pursuant to the Securities Act, such information as is required
for
the Member to sell the Shares under Rule 144. The Parent further covenants
that
it will take such further action as any holder of Shares may reasonably request,
all to the extent required from time to time to enable such person to sell
the
Shares without registration under the Securities Act within the limitation
of
the exemptions provided by Rule 144.
SECTION
7.09. Indemnification
of Investors.
The
Parent will indemnify and hold the Members and their directors, officers,
shareholders, partners, employees and agents (each, an “Investor Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation (collectively, “Losses”) that any such Investor Party may suffer
or incur as a result of or relating to any misrepresentation, breach or
inaccuracy of any representation, warranty, covenant or agreement made by the
Company or Parent in any transaction document. In addition to the indemnity
contained herein, the Parent will reimburse each Investor Party for its
reasonable legal and other expenses (including the cost of any investigation,
preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred. The total amount of indemnity payable
hereunder to any Member shall not exceed the fair market value of the Company
Units exchanged by such Member for the Parent Stock pursuant
hereto.
SECTION
7.10. Non-Public
Information.
Each of
the Company and Parent covenant and agree that neither it nor any other person
acting on their behalf will provide any Member or its agents or counsel with
any
information that the Company or Parent believes constitutes material non-public
information, unless prior thereto such Member shall have executed a written
agreement regarding the confidentiality and use of such information. Each of
the
Company and Parent understands and confirms that each Member shall be relying
on
the foregoing representations in effecting transactions in securities of the
Parent.
ARTICLE
VIII
Miscellaneous
SECTION
8.01. Notices.
All
notices, requests, claims, demands and other communications under this Agreement
shall be in writing and shall be deemed given upon receipt by the parties at
the
following addresses (or at such other address for a party as shall be specified
by like notice):
If
to the
Parent, to:
RTO
Holdings, Inc.
12000
Xxxxxxx Xxxx
Xxxxxx,
Xxxxx 00000
Attention:
Xxxxxxx Xxxxxx
Facsimile:
(972) 233 - 0300
If
to the
Members or the Company, to:
Orion
Ethanol
300
X.
Xxxx
Xxxxx,
Xxxxxx 00000
Attention:
Xxxxxxx Xxxxxx
Facsimile:
(000) 000-0000
with
a
copy to:
Xxxxxx,
Xxxx & Priest, LLP
700
Xxxxxx Xxxxxx, X.X.
Xxxxxxxxxx,
X.X. 00000
Attention:
Xxxxx X. Xxxxxxxxxx, Esq.
Facsimile:
(000) 000-0000
SECTION
8.02. Amendments;
Waivers; No Additional Consideration.
No
provision of this Agreement may be waived or amended except in a written
instrument signed by the Company, Parent and the Members holding a majority
of
the Shares. No waiver of any default with respect to any provision, condition
or
requirement of this Agreement shall be deemed to be a continuing waiver in
the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either
party
to exercise any right hereunder in any manner impair the exercise of any such
right. No consideration shall be offered or paid to any Member to amend or
consent to a waiver or modification of any provision of any transaction document
unless the same consideration is also offered to all Members who then hold
Shares.
SECTION
8.03. Replacement
of Securities.
If any
certificate or instrument evidencing any Shares is mutilated, lost, stolen
or
destroyed, the Parent shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Parent of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Shares.
If a
replacement certificate or instrument evidencing any Shares is requested due
to
a mutilation thereof, the Parent may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
SECTION
8.04. Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Members, Parent and the Company
will be entitled to specific performance under this Agreement. The parties
agree
that monetary damages may not be adequate compensation for any loss incurred
by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
SECTION
8.05. Independent
Nature of Members' Obligations and Rights.
The
obligations of each Member under this Agreement are several and not joint with
the obligations of any other Member, and no Member shall be responsible in
any
way for the performance of the obligations of any other Member under this
Agreement. The decision of each Member to acquire Shares pursuant to this
Agreement has been made by such Member independently of any other Member.
Nothing contained herein, and no action taken by any Member pursuant thereto,
shall be deemed to constitute the Members as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Members are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated herein. Each Members acknowledges
that no other Member has acted as agent for such Member in connection with
making its investment hereunder and that no Member will be acting as agent
of
such Member in connection with monitoring its investment in the Shares or
enforcing its rights under this Agreement. Each Member shall be entitled to
independently protect and enforce its rights, including without limitation
the
rights arising out of this Agreement, and it shall not be necessary for any
other Member to be joined as an additional party in any proceeding for such
purpose. Each of the Company and Parent acknowledge that each of the Members
has
been provided with this same Agreement for the purpose of closing a transaction
with multiple Members and not because it was required or requested to do so
by
any Member.
SECTION
8.06. Limitation
of Liability.
Notwithstanding anything herein to the contrary, each of the Parent and the
Company acknowledge and agree that the liability of a Member arising directly
or
indirectly, under any transaction document of any and every nature whatsoever
shall be satisfied solely out of the assets of such Member, and that no trustee,
officer, other investment vehicle or any other affiliate of such Member or
any
investor, shareholder or holder of shares of beneficial interest of such Member
shall be personally liable for any liabilities of such Member.
SECTION
8.07. Interpretation;
Disclosure Letters.
When a
reference is made in this Agreement to a Section, such reference shall be to
a
Section of this Agreement unless otherwise indicated. Whenever the words
“include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation”.
SECTION
8.08. Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule or 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 is not affected
in any manner materially adverse to any party. Upon such determination that
any
term or other provision is invalid, illegal or incapable of being enforced,
the
parties hereto shall negotiate in good faith to modify this Agreement so as
to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the Transactions are fulfilled to the extent
possible.
SECTION
8.09. Counterparts;
Facsimile Execution.
This
Agreement may be executed 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. Facsimile execution and delivery of this Agreement is legal,
valid and binding for all purposes.
SECTION
8.10. Entire
Agreement; Third Party Beneficiaries.
This
Agreement, including the Exhibits hereto, taken together with the Company
Disclosure Letter and the Parent Disclosure Letter, (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the Transactions and (b) are not
intended to confer upon any person other than the parties any rights or
remedies.
SECTION
8.11. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof, except to the extent the
laws of Nevada are mandatorily applicable to the Transactions.
SECTION
8.12. Assignment.
Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties without the prior written consent of the other
parties. Any purported assignment without such consent shall be void. Subject
to
the preceding sentences, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
The
parties hereto have executed and delivered this Securities Exchange Agreement
as
of the date first above written.
The
Parent:
|
RTO
HOLDINGS, INC.
By:
/s/ Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
CEO and President
|
The
Company:
|
ORION
ETHANOL
By:
/s/ Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
President
|
[Member
Securities Exchange Agreement Signature Pages Follow]
The
parties hereto have executed and delivered this Securities Exchange Agreement
as
of the date first
above written.
The
Members:
|
For
Individuals:
X.
Xxxxxx Xxxxxx
Print
Name Above
/s/
X. Xxxxxx Xxxxxx
Sign
Name Above
For
Entities:
SNB
Associates, LLC
Print
Name Above
By:
/s/ Xxxxxxx X. Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title:
Principal
|
The
parties hereto have executed and delivered this Securities Exchange Agreement
as
of the date first
above written.
The
Members:
|
For
Individuals:
Xxxxx
Xxxxxxxx
Print
Name Above
/s/
Xxxxx Xxxxxxxx
Sign
Name Above
For
Entities:
Whispering
Pines Investments, LLC
Print
Name Above
By:
/s/ Whispering Pines Investments, LLC
Name:
Title:
|
The
parties hereto have executed and delivered this Securities Exchange Agreement
as
of the date first
above written.
The
Members:
|
For
Individuals:
__________________________
Print
Name Above
__________________________
Sign
Name Above
For
Entities:
HB
Partners, LLC
Print
Name Above
By:
/s/ HB Partners, LLC
Name:
Title:
|
The
parties hereto have executed and delivered this Securities Exchange
Agreement as
of the date first
above written.
The
Members:
|
For
Individuals:
__________________________
Print
Name Above
__________________________
Sign
Name Above
For
Entities:
WP
Investments, LLC
Print
Name Above
By:
/s/ WP Investments, LLC
Name:
Title:
|
The
parties hereto have executed and delivered this Securities Exchange Agreement
as
of the date first
above written.
The
Members:
|
For
Individuals:
__________________________
Print
Name Above
__________________________
Sign
Name Above
For
Entities:
Wildcat
Holdco
Print
Name Above
By:
/s/ Wildcat Holdco
Name:
Title:
|
The
parties hereto have executed and delivered this Securities Exchange Agreement
as
of the date first
above written.
The
Members:
|
For
Individuals:
__________________________
Print
Name Above
__________________________
Sign
Name Above
For
Entities:
Gateway
Investors, LLC
Print
Name Above
By:
/s/ Gateway Investors, LLC
Name:
Title:
|
The
parties hereto have executed and delivered this Securities Exchange Agreement
as
of the date first
above written.
The
Members:
|
For
Individuals:
__________________________
Print
Name Above
__________________________
Sign
Name Above
For
Entities:
Cargill
Biofuels Investments, LLC
Print
Name Above
By:
/s/ Cargill Biofuels Investments, LLC
Name:
Title:
|
EXHIBIT
A
Members
of Orion Ethanol
|
Name
of Member
|
Address
of Member
|
Tax
ID Number of Member (if Applicable)
|
Number
of Company Membership Interests Being Exchanged
|
Percentage
of Total Company Units Represented By Membership Interests Being
Exchanged
|
Number
of Shares of Parent Stock to be Received by Member after
Exchange
|
|
SNB
Associates, LLC
|
300
X. Xxxx Xx.
Xxxxx,
XX 00000
|
00-0000000
|
71,960
|
72.11%
|
22,503,772
|
|
Whispering
Pines Investments, LLC
|
420
X. Xxxxxxxx Xx., Xxxxx, XX 00000
|
00-0000000
|
4,497
|
4.46%
|
1,406,486
|
|
HB
Partners, LLC
|
240
X. Xxxx Xx., Xxxxxx, XX 00000
|
00-0000000
|
4,497
|
4.46%
|
1,406,486
|
|
Xxxxx
Xxxxxxxx
|
6000
X. 000 Xxxxx, Xxxxxxxx, XX 00000
|
###-##-####
|
4,497
|
4.46%
|
1,406,486
|
|
WP
Investments, LLC
|
10000
Xxxxxxx Xxxx Xxxx, Xxxxx, Xxxxxx, 00000.
|
00-0000000
|
4,497
|
4.46%
|
1,406,486
|
|
Wildcat
Holdco, LLC
|
300
X. Xxxx Xx.
Xxxxx,
XX 00000
|
00-0000000
|
7,365
|
7.37%
|
2,303,285
|
|
Gateway
Investors, LLC
|
240
X. Xxxx Xx., Xxxxxx, XX 00000
|
00-0000000
|
1,151
|
1.15%
|
359,888
|
|
J
Xxxxxx Xxxxxx
|
420
X. Xxxxxxxx Xx, Xxxxx, XX 00000
|
00-0000000
|
384
|
0.38%
|
119,963
|
|
Cargill
Biofuels Investments, LLC
|
15000
XxXxxxx Xxxx Xxxx, Xxxxxxxxxx, XX 00000
|
00-0000000
|
1,151
|
1.15%
|
359,888
|
|
TOTAL
|
100,000
|
100.00%
|
31,272,740
|
EXHIBIT
B
Form
of
Warrant
(See
Attached)
THE
SALE
AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION. THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE
DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED,
OR
TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT
AS TO
THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE
WITH
APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION OR (II) THERE
IS AN
OPINION OF COUNSEL OR OTHER EVIDENCE, IN EITHER CASE, SATISFACTORY TO THE
CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE AND THAT SUCH OFFER,
SALE,
PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY
STATE
OR OTHER JURISDICTION. THE
RECEIPT OF THIS WARRANT MAY RESULT IN TAXABLE INCOME TO YOU. YOU SHOULD
CONSULT YOUR ACCOUNTANT OR OTHER TAX ADVISOR REGARDING THE SPECIFIC TAX EFFECTS
TO YOU OF THE RECEIPT OF THIS WARRANT
WARRANT
TO PURCHASE COMMON STOCK
of
RTO
HOLDINGS, INC.
This
certifies that, for value received, ______________,
("Holder”)
is entitled, subject to the terms set forth below, to purchase from RTO
HOLDINGS, INC.,
a Nevada
corporation (the “Company”), a number of shares of
the
Common Stock of the Company, par value $.001 per share (the “Common Stock”)
equal to the
quotient of (i) twenty percent (20%) of such initial Holder’s original
investment in Gateway Holdco, LLC, a Kansas limited liability company, divided
by the price (the “Investor
Purchase Price”)
paid
by investors for shares of the Company’s Common Stock in the next equity
financing round in which the Company receives proceeds of at least $20 million
(the “PIPE”),
upon
surrender hereof, at the principal office of the Company referred to below,
with
the Notice of Exercise form attached hereto duly executed, and simultaneous
payment therefor in lawful money of the United States or otherwise as
hereinafter provided, at the Exercise Price as set forth in Section 2 below.
The
number, character and Exercise Price of such shares of Common Stock are subject
to adjustment as provided below. If securities other than shares of Common
Stock
are issued in the PIPE, then the Investor Purchase Price shall be deemed
to be
the price attributable to a share of common stock at the valuation attributable
to the Company in the PIPE on a “pre-money” basis. The term “Warrant” as used
herein shall include this Warrant and any warrants delivered in substitution
or
exchange therefor as provided herein.
1. Term
of Warrant.
Subject
to the terms and conditions set forth herein, this Warrant shall be exercisable,
in whole or in part, during the term commencing on the date that the PIPE
Closes
(the “PIPE Closing Date”) and ending at 5:00 p.m., Eastern Daylight Time, on
third
anniversary following the PIPE Closing Date and
shall
be void thereafter.
2. Exercise
Price.
The
Exercise Price at which this Warrant may be exercised shall be equal
to
125% of the Investor Purchase Price,
as
adjusted from time to time pursuant to Section 11 hereof (the “Exercise Price”).
Notwithstanding the foregoing, if securities other than the shares of Common
Stock are issued in the PIPE, then the Exercise Price shall be deemed to
be 125%
of the price attributable to a share of Common Stock at the valuation
attributable to the Company in the PIPE on “pre-money” basis.
3. Exercise
of Warrant.
(a) The
purchase rights represented by this Warrant are exercisable by the Holder
in
whole or in part, but not for more than the number of shares which may then
constitute the maximum number purchasable (such number being subject to
adjustment as provided in Section 11 below), at any time, or from time to
time,
during the term hereof as described in Section 1 above, by the surrender
of this
Warrant and the Notice of Exercise annexed hereto duly completed and executed
on
behalf of the Holder, at the office of the Company (or such other office
or
agency of the Company as it may designate by notice in writing to the Holder
at
the address of the Holder appearing on the books of the Company), upon payment
(i) in cash or by check acceptable to the Company, (ii) by cancellation by
the
Holder of indebtedness or other obligations of the Company to the Holder,
or
(iii) by a combination of (i) and (ii), of the purchase price of the shares
of
Common Stock to be purchased.
(b) Notwithstanding
any provisions herein to the contrary, if the fair market value of one share
of
Common Stock is greater than the Exercise Price (at the date of calculation
as
set forth below), in lieu of exercising this Warrant for cash, the Holder
may
elect to receive shares equal to the value (as determined below) of this
Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Notice
of
Exercise and notice of such election in which event the Company shall issue
to
the Holder a number of shares of Common Stock computed using the following
formula:
X
=
Y(A-B)
A
| Where | X | = | the number of shares of Common Stock to be issued to the Holder |
|
Y
|
=
|
the
number of shares of Common Stock purchasable under the Warrant
or, if only
a portion of the Warrant is being exercised, the portion of the
Warrant
being canceled (at the date of such
calculation)
|
|
A
|
=
|
the
fair market value of one share of the Company’s Common Stock (at the date
of such calculation)
|
|
B
|
=
|
Exercise
Price (as adjusted to the date of such
calculation)
|
For
purposes of the above calculation, fair market value of one share of Common
Stock shall be determined by the Company’s Board of Directors in good faith;
provided, however, that where there exists a public market for the Company’s
Common Stock at the time of such exercise, the fair market value per share
shall
be the average of the closing bid and asked prices of the Common Stock quoted
in
the Over-The-Counter Market Summary or the last reported sale price of the
Common Stock or the closing price quoted on any exchange on which the Common
Stock is listed, whichever is applicable, as published in the Eastern Edition
of
The Wall Street Journal for the five (5) trading days prior to the date of
determination of fair market value. Notwithstanding the foregoing, in the
event
the Warrant is exercised in connection with the Company’s initial public
offering of Common Stock, the fair market value per share shall be the per
share
offering price to the public of the Company’s initial public
offering.
(c) This
Warrant shall be deemed to have been exercised immediately prior to the close
of
business on the date of its surrender for exercise as provided above, and
the
person entitled to receive the shares of Common Stock issuable upon such
exercise shall be treated for all purposes as the holder of record of such
shares as of the close of business on such date. As promptly as practicable
on
or after such date and in any event within ten (10) days thereafter, the
Company
at its expense shall issue and deliver to the person or persons entitled
to
receive the same a certificate or certificates for the number of shares of
Common Stock issuable upon such exercise. In the event that this Warrant
is
exercised in part, the Company at its expense will execute and deliver a
new
Warrant of like tenor exercisable for the number of shares for which this
Warrant may then be exercised.
4. Fractional
Shares or Scrip.
Fractional shares or scrip representing fractional shares may be issued upon
the
exercise of this Warrant.
5. Replacement
of Warrant.
On
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of loss, theft
or
destruction, on delivery of an indemnity agreement reasonably satisfactory
in
form and substance to the Company or, in the case of mutilation, on surrender
and cancellation of this Warrant, the Company at its expense shall execute
and
deliver, in lieu of this Warrant, a new warrant of like tenor and
amount.
6. Rights
of Stockholders.
This
Warrant shall not entitle its Holder to any of the rights of a stockholder
of
the Company.
7. Restrictions
on Transfer.
The
Holder of this Warrant by acceptance hereof agrees that this Warrant may
not be
transferred in whole or in part until after the PIPE Closing and may only
be
transferred thereafter in compliance with all applicable federal and state
securities laws.
8. Reservation
of Stock.
The
Company covenants that during the term this Warrant is exercisable, the Company
will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of Common Stock upon the exercise of
this
Warrant and, from time to time, will take all steps necessary to amend its
certificate of incorporation as amended (the “Certificate”) to provide
sufficient reserves of shares of Common Stock issuable upon exercise of the
Warrant. The Company further covenants that all shares that may be issued
upon
the exercise of rights represented by this Warrant and payment of the Exercise
Price, all as set forth herein, will be free from all taxes, liens and charges
in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously or otherwise specified herein). The Company agrees
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for shares of Common Stock upon
the
exercise of this Warrant.
9. Notices.
(a) Whenever
the Exercise Price or number of shares of Common Stock purchasable hereunder
shall be adjusted pursuant to Section 11 hereof, the Company shall issue
a
certificate signed by its Chief Financial Officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment,
the
method by which such adjustment was calculated, and the Exercise Price and
number of shares purchasable hereunder after giving effect to such adjustment,
and shall cause a copy of such certificate to be mailed (by first-class mail,
postage prepaid) to the Holder of this Warrant.
(b) In
case:
(i) the
Company shall take a record of the holders of its Common Stock (or other
stock
or securities at the time receivable upon the exercise of this Warrant) for
the
purpose of entitling them to receive any dividend or other distribution,
or any
right to subscribe for or purchase any shares of stock of any class or any
other
securities, or to receive any other right, or
(ii) of
any
capital reorganization of the Company, any reclassification of the capital
stock
of the Company, any consolidation or merger of the Company with or into another
corporation, or any conveyance of at least 51% of the assets of the Company
to
another corporation, or
(iii) of
any
voluntary dissolution, liquidation or winding-up of the Company,
then,
and
in each such case, the Company will mail or cause to be mailed to the Holder
or
Holders a notice specifying, as the case may be, (A) the date on which a
record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right,
or (B)
the date on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take place, and
the
time, if any is to be fixed, as of which the holders of record of Common
Stock
(or such stock or securities at the time receivable upon the exercise of
this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
15
days prior to the date therein specified.
(c) All
such
notices, advices and communications shall be deemed to have been received
(i) in
the case of personal delivery, on the date of such delivery and (ii) in the
case
of mailing, on the third business day following the date of such
mailing.
10. Amendments.
(a) Any
term
of this Warrant may be amended with the written consent of the Company and
the
Holder. The Company has issued various warrants on the date hereof, and the
Company agrees that it will not agree to any amendments to any of the warrants
issued on the date hereof that are favorable to any single warrant holder
without giving the same benefit to all other warrant holders who received
Company warrants on the date hereof.
(b) No
waivers of, or exceptions to, any term, condition or provision of this Warrant,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition or provision.
11. Adjustments.
The
Exercise Price and the number of shares purchasable hereunder are subject
to
adjustment from time to time as follows:
11.1 Merger,
Sales of Assets, etc.
If at
any time while this Warrant, or any portion thereof, is outstanding and
unexpired there shall be (i) a reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), (ii) a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving entity, or a reverse
triangular merger in which the Company is the surviving entity but the shares
of
the Company’s capital stock outstanding immediately prior to the merger are
converted by virtue of the merger into other property, whether in the form
of
securities, cash, or otherwise, or (iii) a sale or transfer of the Company’s
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation, sale or transfer,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Exercise Price then in effect,
the number of shares of stock or other securities or property of the successor
corporation resulting from such reorganization, merger, consolidation, sale
or
transfer that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised immediately before
such reorganization, merger, consolidation, sale or transfer, all subject
to
further adjustment as provided in this Section 11. The foregoing provisions
of
this Section 11.1 shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities
of
any other corporation that are at the time receivable upon the exercise of
this
Warrant. If the per-share consideration payable to the holder hereof for
shares
in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by the Company’s Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company’s Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end
that
the provisions of this Warrant shall be applicable after that event, as near
as
reasonably may be, in relation to any shares or other property deliverable
after
that event upon exercise of this Warrant.
11.2 Reclassification,
etc.
If the
Company, at any time while this Warrant, or any portion hereof, remains
outstanding and unexpired by reclassification of securities or otherwise,
shall
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class
or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of
such
change with respect to the securities that were subject to the purchase rights
under this Warrant immediately prior to such reclassification or other change
and the Exercise Price therefor shall be appropriately adjusted, all subject
to
further adjustment as provided in this Section 11.
11.3 Split,
Subdivision or Combination of Shares.
If the
Company at any time while this Warrant, or any portion hereof, remains
outstanding and unexpired shall split, subdivide or combine the securities
as to
which purchase rights under this Warrant exist, into a different number of
securities of the same class, (i) the number of shares of Common Stock or
other
securities issuable upon the exercise of this Warrant shall be proportionately
increased in the case of a split or subdivision or proportionately decreased
in
the case of a combination and (ii) the Exercise Price for such securities
shall
be proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination.
11.4 Adjustments
for Dividends in Stock or Other Securities or Property.
If
while this Warrant, or any portion hereof, remains outstanding and unexpired
the
holders of the securities as to which purchase rights under this Warrant
exist
at the time shall have received, or, on or after the record date fixed for
the
determination of eligible stockholders, shall have become entitled to receive,
without payment therefor, other or additional stock or other securities or
property (other than cash) of the Company by way of dividend, then and in
each
case, this Warrant shall represent the right to acquire, in addition to the
number of shares of the security receivable upon exercise of this Warrant,
and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash)
of
the Company that such holder would hold on the date of such exercise had
it been
the holder of record of the security receivable upon exercise of this Warrant
on
the date hereof and had thereafter, during the period from the date hereof
to
and including the date of such exercise, retained such shares and/or all
other
additional stock available by it as aforesaid during such period, giving
effect
to all adjustments called for during such period by the provisions of this
Section 11.
11.5 Certificate
as to Adjustments.
Upon
the occurrence of each adjustment or readjustment pursuant to this Section
11,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each Holder
of
this Warrant a certificate setting forth such adjustment or readjustment
and
showing in detail the facts upon which such adjustment or readjustment is
based.
The Company shall, upon the written request, at any time, of any such Holder,
furnish or cause to be furnished to such Holder a like certificate setting
forth: (i) such adjustments and readjustments; (ii) the Exercise Price at
the
time in effect; and (iii) the number of shares and the amount, if any, of
other
property that at the time would be received upon the exercise of the
Warrant.
11.6 No
Impairment.
The
Company will not, by any voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder
by the
Company, but will at all times in good faith assist in the carrying out of
all
the provisions of this Section 11 and in the taking of all such action as
may be
necessary or appropriate in order to protect the rights of the Holder of
this
Warrant against impairment.
12. Miscellaneous.
12.1 Governing
Law.
This
Warrant shall be governed by and construed according to the laws of the State
of
Nevada without regard to its conflicts of law principles.
12.2 References.
Unless
the context otherwise requires, any reference to a “Section” refers to a section
of this Warrant. Any reference to “this Section” refers to the whole number
section in which such reference is contained.
12.3 Definitions.
Capitalized terms used in this Warrant but not defined herein shall have
the
meanings set forth in the Warrant Agreement.
[signature
page follows]
IN
WITNESS WHEREOF, RTO Holdings, Inc., has caused this Warrant to be executed
by
its officers thereunto duly authorized as of August __, 2006.
|
RTO
HOLDINGS, INC.
By
_______________________________
Name:
Title:
|
NOTICE
OF EXERCISE
| TO: |
RTO
HOLDINGS, INC.
|
(1) The
undersigned hereby (A) elects to purchase _____ shares of Common Stock of
RTO
HOLDINGS, INC., pursuant to the provisions of Section 3(a) of the attached
Warrant, and tenders herewith payment of the purchase price for such shares
in
full, or (B) elects to exercise this Warrant for the purchase of _______
shares
of Common Stock, pursuant to the provisions of Section 3(b) of the attached
Warrant.
(2) In
exercising this Warrant, the undersigned hereby confirms and acknowledges
that
the shares of Common Stock are being acquired solely for the account of the
undersigned and not as a nominee for any other party, and for investment,
and
that the undersigned will not offer, sell or otherwise dispose of any such
shares of Common Stock except under circumstances that will not result in
a
violation of the Securities Act of 1933, as amended, or any applicable state
securities laws.
(3) Please
issue a certificate or certificates representing said shares of Common Stock
in
the name of the undersigned or in such other name as is specified
below:
|
___________________________
(Name)
___________________________
(Name)
|
(4) Please
issue a new Warrant for the unexercised portion of the attached Warrant in
the
name of the undersigned or in such other name as is specified
below:
|
____________________________
(Date)
|
___________________________
(Name)
___________________________
(Signature)
|
EXHIBIT
C
Form
of Make Whole Agreement
(See
Attached)
MAKE
WHOLE AGREEMENT
This
Make
Whole Agreement (the “Agreement”)
is
entered into as of August 28, 2006 by and among the stockholders of RTO
HOLDINGS, INC., a Nevada corporation (“RTO Holdings”) that execute this
Agreement on the signature page hereto (each a “Party”
and
collectively, the “Parties”).
BACKGROUND
Certain
of the Parties (the “Orion
Development Members”)
were
formerly members of Orion Development, LLC, a Kansas limited liability company
(“Orion
Development”).
Each
of the Orion Development Members had held the respective percentage ownership
in
Orion Development reflected opposite each such Member’s name on Schedule
A
attached
hereto as evidenced by the number of Units of Orion Development reflected
on
such Schedule
A
and the
related rights of such Member in, and obligations under, the Operating Agreement
of Orion Development, dated June 20, 2006 (the “Orion
Development Operating Agreement”)
(collectively, the “Orion
Development Interests”).
Certain of the Parties (the “Gateway
Members”),
were
formerly members of Gateway Holdco, LLC, a Kansas limited liability company
(“Gateway
Holdco”).
Each
of the Gateway Members had held the respective percentage ownership in Gateway
Holdco reflected opposite each such Member’s name on Schedule
B
attached
hereto as evidenced by the number of Units of Gateway Holdco reflected on
such
Schedule
B
and the
related rights of such Member in, and obligations under, the Operating Agreement
of Gateway Holdco, dated March 30, 2006 (the “Gateway
Holdco Operating Agreement”)
(collectively, the “Gateway
Interests”).
Pursuant
to a Unit Exchange Agreement, dated August 28, 2006, by and among the Orion
Development Members and Orion Ethanol, LLC, a Kansas limited liability company,
(“Orion Ethanol”), the Orion Development Members exchanged their Orion
Development Interests for units of Orion Ethanol (the “Orion
Ethanol Interests”).
Pursuant to a Unit Exchange Agreement, dated August 28, 2006, by and among
certain Gateway Members and Orion Ethanol, certain Gateway Members exchanged
their Gateway Interests for Orion Ethanol Interests. Thereafter, pursuant
to a
Securities Exchange Agreement, dated August 28, 2006, by and among Orion
Ethanol, the members of Orion Ethanol and RTO Holdings, the members of Orion
Ethanol exchanged their Orion Ethanol Interests for 31,272,740 shares (the
“RTO
Shares”)
of
common stock, in the aggregate, of RTO Holdings. The RTO Shares represent
95.75%
of the issued and outstanding capital stock of RTO Holdings.
As
a
result of the transactions effected pursuant to such Securities Exchange
Agreement, the Gateway Members own 9.62% of RTO Holdings and the Orion
Development Members hold 86.13% of RTO Holdings.
In
order
to induce the Gateway Members to enter into the aforementioned Unit Exchange
Agreement and Securities Exchange Agreement, the Orion Development Members
agreed to enter into this Agreement pursuant to which the RTO Shares received
by
the Orion Development Members and the Gateway Members pursuant to the Securities
Exchange Agreement will be reallocated between them under the circumstances
described below.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing and the mutual promises and
covenants herein contained, the Orion Development Members and the Gateway
Members hereby agree as follows:
1. PIPE
Transaction.
If RTO
Holdings does not consummate an equity financing transaction in which RTO
Holdings receives gross proceeds of at least $20 million on
or
before July 31, 2007 (the “PIPE”), the RTO Shares received pursuant to the
Securities and Exchange Agreement will be reallocated by causing Orion
Development Members to transfer, on a pro rata basis, to the Gateway Members
a
number of RTO Shares held by them, such that, in the aggregate, following
such
transfer, the Gateway Members will own 62.09% of the issued and outstanding
capital stock of RTO Holdings (the “Transactions”). The RTO Shares so
transferred to the Gateway Members will be allocated among the Gateway Members
in proportion to their respective ownership interests in Gateway Holdco as
reflected on Schedule B attached hereto.
2. Transfer
of RTO Shares.
(a)
The
Orion
Development Members shall not sell, transfer or otherwise convey or dispose
of
any RTO Shares held by them that may be transferred to a Gateway Member
hereunder unless the transferee or other acquiror of such RTO Shares agrees
in
writing to be bound by the terms and conditions of this Agreement.
(b) Upon
written request of the Gateway Members, the Orion Development Members shall
make
reasonable representations to the Gateway Members regarding ownership of
the RTO
Shares and authority to transfer RTO Shares hereunder. Similarly, upon written
request of the Orion Development Members, the Gateway Members shall make
reasonable representations to the Orion Development Members to allow the
Orion
Development Members to confirm that the RTO Shares may be transferred hereunder
without violation of federal or state securities laws. Such representations,
if
requested, shall be a condition precedent to the Transactions contemplated
hereby.
3. Termination.
This
Agreement shall automatically terminate upon the closing of the
PIPE.
4. Further
Assurances.
Each
Party shall execute and deliver or cause to be executed and delivered from
time
to time, whether prior to or after the Transactions, such instruments,
documents, agreements, consents and assurances and take such other actions,
as
may reasonably be required, to carry out the intent of this
Agreement.
5. Successors
and Assigns.
The
provisions of this Agreement shall bind and inure to the benefit of the parties
to this Agreement and their respective successors and assigns.
6. Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Kansas, without regard to conflict of laws principles.
7. Construction.
This
Agreement has been negotiated and prepared jointly by all parties hereto,
has
been reviewed by legal counsel to each Party, and, as such, shall not be
construed against or in favor of any Party by reason of the drafting of any
provision by any Party or by legal counsel thereto.
8. Counterparts.
This
Agreement may be executed in one or more counterparts and on telecopy
counterparts, each of which when so executed shall be deemed to be an original,
but all of which take together shall constitute one and the same
agreement.
9. Headings.
The
headings, captions, and arrangements used in this Agreement are for convenience
only, and shall not affect the interpretation of this Agreement.
10. Amendment.
This
Agreement may only be amended by a written agreement signed by each of the
parties hereto.
[Signature
Pages Follow]
[Orion
Development Members Signature Page]
IN
WITNESS WHEREOF, each of the Orion Development Members has executed this
Agreement as of the date first above written.
|
SNB
Associates, LLC
Print
Name of Orion Development Member Above
By:
/s/ SNB Associates, LLC
Name:
Title:
Address:
000 X. Xxxx Xx
Xxxxx,
XX 00000
|
[Orion
Development Members Signature Page]
IN
WITNESS WHEREOF, each of the Orion Development Members has executed this
Agreement as of the date first above written.
|
Whispering
Pines Investments, LLC
Print
Name of Orion Development Member Above
By:
/s/ Whispering Pines Investments, LLC
Name:
Title:
Address:
000 X. Xxxxxxxx Xx.
Xxxxx,
Xxxxxx 00000
|
[Orion
Development Members Signature Page]
IN
WITNESS WHEREOF, each of the Orion Development Members has executed this
Agreement as of the date first above written.
|
HB
Partners, LLC
Print
Name of Orion Development Member Above
By:
/s/ HB Partners, LLC
Name:
Title:
Address:
000 X. Xxxx Xx.
Xxxxxx, XX 00000
|
[Orion
Development Members Signature Page]
IN
WITNESS WHEREOF, each of the Orion Development Members has executed this
Agreement as of the date first above written.
|
Xxxxx
Xxxxxxxx
Print
Name of Orion Development Member Above
By:
/s/ Xxxxx Xxxxxxxx
Name:
Title:
Address:
0000 X. 000
Xxxxx
Xxxxxxxx, XX 00000
|
[Orion
Development Members Signature Page]
IN
WITNESS WHEREOF, each of the Orion Development Members has executed this
Agreement as of the date first above written.
|
WP
Investments, LLC
Print
Name of Orion Development Member Above
By:
/s/ WP Investments, LLC
Name:
Title:
Address:
00000 Xxxxxxx Xxxx Xx.
Xxxxx,
XX 00000
|
[Gateway
Members Signature Page]
IN
WITNESS WHEREOF, each of the Gateway Members has executed this Agreement
as of
the date first above written.
|
Wildcat
Holdco
Print
Name of Gateway Member Above
By:
/s/ Wildcat Holdco
Name:
Title:
Address:
000 X. Xxxx Xx
Xxxxx,
XX 00000
|
[Gateway
Members Signature Page]
IN
WITNESS WHEREOF, each of the Gateway Members has executed this Agreement
as of
the date first above written.
|
X.
Xxxxxx Xxxxxx
Print
Name of Gateway Member Above
By: /s/
X. Xxxxxx Xxxxxx
Name:
Title:
Address:
000 X. Xxxxxxxx Xx.
Xxxxx, XX 00000
|
[Gateway
Members Signature Page]
IN
WITNESS WHEREOF, each of the Gateway Members has executed this Agreement
as of
the date first above written.
|
Cargill
Biofuels Investments, LLC
Print
Name of Gateway Member Above
By:
/s/ Cargill Biofuels Investments, LLC
Name:
Title:
Address:
00000 XxXxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
|
Schedule
A
|
Name
of Orion Development Member
|
Number
of Units in Orion Development Held
|
Percentage
of Orion Development Units Held
|
|
SNB
Associates, LLC
|
6,000,000
|
80%
|
|
Whispering
Pines Investments, LLC
|
375,000
|
5%
|
|
HB
Partners, LLC
|
375,000
|
5%
|
|
Xxxxx
Xxxxxxxx
|
375,000
|
5%
|
|
WP
Investments, LLC
|
375,000
|
5%
|
|
TOTAL
|
7,500,000
|
100%
|
Schedule
B
|
Name
of Gateway Member
|
Number
of Units in Gateway Holdco Held
|
Percentage
of Gateway Holdco Units Held
|
|
Wildcat
Holdco, LLC
|
9600
|
45.498%
|
|
Gateway
Investors, LLC
|
1500
|
7.109%
|
|
X.
Xxxxxx Xxxxxx
|
500
|
2.369%
|
|
Cargill
Biofuels Investments, LLC
|
1500
|
7.109%
|
|
TOTAL
|
13,100
|
62.09%
|
