UNIT EXCHANGE AGREEMENT
This
Unit
Exchange Agreement (the “Agreement”)
is
entered into as of August 28, 2006 by and among ORION ETHANOL, LLC (the
“Orion”),
and
each of the members of ORION DEVELOPMENT, LLC., a Kansas limited liability
company (“Orion
Development”)
that
execute this Agreement on the signature page hereto (each a “Member”
and
collectively, the “Members”).
Each
of the parties hereto is referred to as a “Party,”
and
collectively, as the “Parties”.
BACKGROUND
Each
of
the Members is a member of Orion Development holding 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
Schedule
A
attached
hereto 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”).
Each
such Member desires to Transfer to Orion its Orion Development Interests in
exchange for the number of membership interests in Orion as specified on
Schedule
A
along
with all of the related rights of a member of Orion under the Operating
Agreement of Orion, dated August 28, 2006 (the “Orion
Operating Agreement”)
(the
“Orion
Interests”).
Orion
desires to acquire the Orion Development Interests from the respective Members
and assume each such Member’s obligations under the Operating
Agreement.
Article
7
of the Orion Development Operating Agreement provides, among other things,
that
Members may Transfer their Orion Development Interests as part of a Permitted
Transfer. The Members have obtained the unanimous consent of the Members and
the
unanimous consent of the Board to treat the Transfer contemplated hereby as
a
Permitted Transfer under the Orion Development Operating Agreement.
Section
7.2 of the Orion Development Operating Agreement provides that a transferee
of a
Member’s Interest shall become a Substitute Member in place of the transferor of
such Interest if (a) the transferor has stated such intention in a written
instrument of assignment; (b) the Transferee has executed an instrument agreeing
to be bound by the terms and conditions of the Orion Development Operating
Agreement; and (c) if required by the Board, the transferor has furnished the
Orion Development with an opinion of counsel, satisfactory to the Board, that
the proposed Transfer will not have any of the consequences described in Section
7.1 of the Orion Development Operating Agreement. The Members desire that Orion
become a Substitute Member hereunder and this Agreement is intended to satisfy
the requirements for Orion to become a Substitute Member.
The
transactions contemplated hereby are being consummated in furtherance of a
plan
to hereafter effect an exchange of all of the outstanding Equity Securities
(as
defined in the Orion Operating Agreement) of Orion for shares of the common
stock of a company (the “Public
Company”)
that
is obligated to file periodic reports with the US Securities and Exchange
Commission and whose shares are eligible for quotation on the NASD Over-the
Counter Bulletin Board (the “Reverse
Merger Transaction”)
.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth, and intending to be legally bound, the parties hereto agree as
follows:
1. Defined
Terms.
Each
capitalized term used but not otherwise defined in this Agreement has the
meaning set forth for such term in the Orion Development Operating Agreement
or
the Orion Operating Agreement, as applicable.
2. Exchange.
Each
Member does hereby sell, assign and transfer unto Orion, all of the right,
title
and interest of such Member in and to such Member’s Orion Development Interests,
including without limitation any and all right, title and interest which such
Member may have (as a result of owning such Member’s Orion Development
Interests) in and to the Orion Development Operating Agreement, Orion
Development’s property and capital, distributions of Orion Development’s cash or
other property, and allocations of profits, gains, losses and tax credits made
by Orion Development with respect to the Orion Development Interests or
otherwise. In exchange for such assignment by each such Member of such Member’s
Orion Development Interests as aforesaid, Orion hereby grants and issues to
each
such Member the Orion Interests specified opposite such Member’s name on
Schedule
A
as
represented by Units of Orion as specified on Schedule
A,
including without limitation any and all right, title and interest which such
Member is entitled to (as a result of owning such Member’s Orion Interests)
under the Orion Operating Agreement, in Orion’s property and capital, in
distributions of Orion’s cash or other property, and in allocations of profits,
gains, losses and tax credits made by Orion with respect to such Member’s Orion
Interests or otherwise.
3. Assumption
of Obligations and Agreement to be Bound by Operating Agreement.
As
required by Section 7.2, each Member hereby states its intention that upon
the
completion of the transfer of the Orion Development Interests to Orion as
contemplated hereby, Orion shall become a Substitute Member under the Orion
Development Operating Agreement. Orion hereby accepts such assignment of all
of
the Orion Development Interests being assigned to Orion as reflected on
Schedule
A
and
hereby expressly assumes all of the rights, obligations and liabilities of
the
Members under and with respect to the Orion Development Interests and agrees
to
be bound by the Orion Development Operating Agreement as a member thereunder.
Each of the Members hereby accepts Orion’s grant and issuance of the Orion
Interests and agrees to be bound by the terms of the Orion Operating Agreement
as a member thereunder.
4. Record
of Assignment.
Upon
the execution and effectiveness of this Agreement, the Parties shall notify
Orion Development’s Board and request that the assignment of the Orion
Development Interests to Orion be recorded in Orion Development’s records so
that Orion stands in the name of the Members on the books of Orion Development
and Orion shall cause the grant and issuance of Orion Interests to the Members
to be recorded in its records so that the Members shall become members of Orion
thereunder.
5. Schedule
of Members.
The
Members shall cause Exhibit
A,
the
Schedule of Members, to the Orion Development Operating Agreement to be amended
so as to reflect Orion’s ownership of the Orion Development Interests and Orion
shall amend Exhibit
A,
the
Schedule of Members, to the Orion Operating Agreement so as to reflect each
Member’s ownership of its Orion Interests as reflected on Schedule
A
hereto.
2
6. Put/Call
Right.
If the
Reverse Merger Transaction is not consummated within sixty (60) days following
the date hereof (the “Outside
Date”),
then
(a) each Member shall have the right for a period of thirty (30) days following
the Outside Date to cause Orion to redeem such Member’s Orion Interests from
such Member in exchange for the Orion Development Interests acquired from such
Member hereunder, and (b) Orion shall have the right for a period of thirty
(30)
days following the Outside Date to cause all Members to acquire the Orion
Development Interests acquired by Orion hereunder from Orion in exchange for
the
redemption of such Member’s Orion Interests.
7. If
the
Reverse Merger Transaction is not consummated within sixty (60) days following
the date hereof (the “Outside
Date”),
then
(a) each Member shall have the right for a period of thirty (30) days following
the Outside Date to cause Orion to redeem such Member’s Orion Interests from
such Member in exchange for the Gateway Interests acquired from such Member
hereunder, and (b) Orion shall have the right for a period of thirty (30) days
following the Outside Date to cause all Members to acquire the Gateway Interests
acquired by Orion hereunder from Orion in exchange for the redemption of such
Member’s Orion Interests.
8. Representations
and Warranties of the Members.
Each
Member hereby represents and warrants to Orion as follows:
(a) Such
Member owns the Orion Development Interests set forth opposite such Member’s
name on Schedule
A,
of
record and beneficially, free and clear of all liens, claims, charges, security
interests, and encumbrances of any kind whatsoever.
(b) Such
Member
has not,
since acquiring its Orion Development Interests, ever granted to any person
an
option or right to purchase or otherwise acquire its Orion Development
Interests, by contract of sale or otherwise.
(c) Such
Member
has full
right, power and authority to execute, deliver and perform this Agreement and
to
carry out the transactions contemplated hereby.
(d) This
Agreement has been duly and validly executed and delivered by such Member and
constitutes a valid, binding obligation of such Member, enforceable against
such
Member in accordance with its terms (except as such enforceability may be
limited by laws affecting creditor’s rights generally).
(e) Such
Member is an “Accredited Investors” as defined in Regulation D promulgated under
the Act.
(f) The
Orion
Interests specified opposite such Member’s name on Schedule
A
are
being acquired by such Member for its own account, for investment purposes
and
not with a view to the sale or distribution of all or any part of the Orion
Interests, except in connection with the Reverse Merger Transaction, nor with
any present intention to sell or in any way distribute the same, as those terms
are used in the Act, and the rules and regulations promulgated thereunder,
except in connection with the Reverse Merger Transaction.
3
(g) Such
Member has sufficient knowledge and experience in financial matters so as to
be
capable of evaluating the merits and risks of acquiring the Orion
Interests.
(h) Such
Member has reviewed copies of such documents and other information as such
Member has deemed necessary in order to make an informed investment decision
with respect to its acquisition of the Orion Interests.
(i) Such
Member understands that the Orion Interests may not be sold, transferred or
otherwise disposed of without registration under the Act or the availability
of
an exemption therefrom.
(j) Such
Member understands and has the financial capability of assuming the economic
risk of an investment in the Orion Interests for an indefinite period of
time.
(k) Such
Member understands the tax consequences and risks of this transaction, and
will
seek professional assistance in reviewing the tax consequences this transaction
and in the preparation of its tax returns.
9. Representations
and Warranties of Orion.
Orion
hereby represents and warrants to each Member as follows:
(a) The
Orion
Interests, when issued, sold and delivered pursuant to the provisions of this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
(b) Orion
has full
right, power and authority to execute, deliver and perform this Agreement and
to
carry out the transactions contemplated hereby.
(c) This
Agreement has been duly and validly executed and delivered by Orion and
constitutes a valid, binding obligation of Orion, enforceable against Orion
in
accordance with its terms (except as such enforceability may be limited by
laws
affecting creditor’s rights generally).
(d) Orion
is
an “Accredited Investors” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended (the “Act”).
(e) The
Orion
Development Interests are being acquired by Orion for its own account, for
investment purposes and not with a view to the sale or distribution of all
or
any part of the Orion Development Interests, except in connection with the
Reverse Merger Transaction, nor with any present intention to sell or in any
way
distribute the same, as those terms are used in the Act, and the rules and
regulations promulgated thereunder, except in connection with the Reverse Merger
Transaction.
4
(f) Orion
has
sufficient knowledge and experience in financial matters so as to be capable
of
evaluating the merits and risks of acquiring the Orion Development
Interests.
(g) Orion
has
reviewed copies of such documents and other information as Orion has deemed
necessary in order to make an informed investment decision with respect to
its
acquisition of the Orion Development Interests.
(h) Orion
understands that the Orion Development Interests may not be sold, transferred
or
otherwise disposed of without registration under the Act or the availability
of
an exemption therefrom.
(i) Orion
understands and has the financial capability of assuming the economic risk
of an
investment in the Orion Development Interests for an indefinite period of
time.
(j) Orion
understands the tax consequences and risks of this transaction, and will seek
professional assistance in reviewing the tax consequences this transaction
and
in the preparation of its tax returns.
10. Further
Assurances.
Each
Party shall execute and deliver or cause to be executed and delivered from
time
to time, whether prior to or after Closing, 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. Headings.
The
headings, captions, and arrangements used in this Agreement are for convenience
only, and shall not affect the interpretation of this Agreement.
16. Amendment.
This
Agreement may only be amended by a written agreement signed by each of the
parties hereto.
[Signature
Pages Follow]
5
[Orion
Signature Page]
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed effective
as of the date first above written.
| ORION: | ||
| ORION ETHANOL, LLC | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxx | |
|
Name: Xxxxxxx Xxxxxx
|
||
| Title: President | ||
6
[Member
Signature Page]
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed effective
as of the date first above written.
|
MEMBER:
SNB
ASSOCIATES, LLC
----------------------------------------
Print
Name of Member Above
By:
/s/ Xxxxxxx Xxxxxx
----------------------------------------------
Name:
Xxxxxxx Xxxxxx
Title:
Address:
000 X. Xxxx Xxxxxx
----------------------------------------------
Xxxxx, XX 00000
-----------------------------------------------
-------------------------------
|
7
|
MEMBER:
Whispering
Pines Investments, LLC
----------------------------------------
Print
Name of Member Above
By:
/s/ Whispering Pines Investments, LLC
----------------------------------------------
Name:
Title:
Address:
000 X. Xxxxxxxx Xxxxxx
----------------------------------------------
Xxxxx, XX 00000
-----------------------------------------------
-------------------------------
|
8
|
MEMBER:
WP
Investments, LLC
----------------------------------------
Print
Name of Member Above
By:
/s/ WP Investments, LLC
----------------------------------------------
Name:
Title:
Address:
00000 Xxxxxxx Xxxx Xxxx
----------------------------------------------
Xxxxx, XX 00000
-----------------------------------------------
-------------------------------
|
9
|
MEMBER:
HB
PARTNERS, LLC
----------------------------------------
Print
Name of Member Above
By:
/s/ HB PARTNERS, LLC
----------------------------------------------
Name:
Xxxxxxx Xxxxxx
Title:
Address:
000 X. Xxxx Xxxx
----------------------------------------------
Xxxxxx, XX 00000
-----------------------------------------------
-------------------------------
|
10
|
MEMBER:
Xxxxx
Xxxxxxxx
----------------------------------------
Print
Name of Member Above
By:
/s/ Jerrry Xxxxxxxx
----------------------------------------------
Name:
Jerrry Xxxxxxxx
Title:
Address:
0000 X. 000 Xxxxx
----------------------------------------------
Xxxxxxxx, XX 00000
-----------------------------------------------
-------------------------------
|
11
[Orion
Board Signature Page]
The
Board
of Orion hereby authorizes and approves the foregoing Agreement, consents to
all
of the terms and conditions stated therein and authorizes the officer of Orion
that has executed the Agreement above to so execute the Agreement. The Board
hereby approves the admittance of the Members executing the Agreement as Members
of Orion pursuant to Section 4.2 of the Orion Operating Agreement. If the
Put/Call right provided for in Section 8 of the Agreement is exercised as
contemplated thereby, then the Board shall be deemed to have approved such
transaction through this written consent.
| DIRECTOR | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxx | |
|
Xxxxxxx
Xxxxxx
|
||
12
Schedule
A
|
Name
of Member
|
Number
of Units in Orion Development being transferred to
Orion
|
Number
of Units of Orion being Issued to Member in Exchange for Member’s Orion
Development Interests
|
|
SNB
Associates, LLC
|
6,000,000
|
71,960
|
|
Whispering
Pines Investments, LLC
|
375,000
|
4,497
|
|
WP
Investments, LLC
|
375,000
|
4,497
|
|
HB
Partners, LLC
|
375,000
|
4,497
|
|
Xxxxx
Xxxxxxxx
|
375,000
|
4,497
|
|
TOTAL
|
7,500,000
|
89,948
|
13
