ORBIT ENERGY RHODE ISLAND, LLC PURCHASE AGREEMENT

 

This Orbit Energy Rhode Island, LLC Purchase Agreement (this “Agreement”) is
made and entered into as of October 19, 2012, (the “Effective Date”) by and
between Bluesphere Corporation, a Nevada corporation (“Purchaser”), and Orbit
Energy, Inc., a North Carolina corporation (“Seller”).

 

RECITALS

 

A.           Seller has established Orbit Energy Rhode Island, LLC (the “LLC”)
to implement an anaerobic digestion and energy generation project in Johnston,
Rhode Island, or at an alternate site in Rhode Island (the “Project”).

 

B.           In accordance with the terms of this Agreement, Seller desires to
sell and transfer 100% of its right, title and interest in, to and under the LLC
to Purchaser and Purchaser desires to purchase and accept 100% of the right,
title and interest in, to and under the LLC for the purpose of implementing the
Project.

 

Now, therefore, the parties hereby agree as follows.

 

1.          RECITALS. The foregoing recitals are incorporated by reference as if
fully set forth herein.

 

2.          SALE AND PURCHASE OF THE LLC.

 

2.1           Terms of Sale and Purchase; Purchaser Option. Subject to the terms
and conditions of this Agreement, Seller hereby agrees to sell to Purchaser, and
Purchaser hereby agrees to purchase from Seller, 100% of its right, title and
interest in, to and under the LLC, which owns and holds the right to implement
the Project, in exchange for the compensation set forth on Annex A hereto (the
“Purchase Price”). Notwithstanding anything else to the contrary herein,
Purchaser shall have an option (exercisable in its sole discretion) (i) to
terminate this Agreement without any liability to Seller or (ii) to delay the
closing for so long as it deems necessary if at any time Anwar Shareef is not
chief executive officer and majority shareholder of Seller.

 

2.2           LLC Transfer in Escrow. Within 10 days of the date hereof, Seller
agrees to deposit in escrow a signed agreement in form and substance acceptable
to Purchaser (the “Transfer Agreement”) transferring 100% of the right, title
and interest in, to and under the LLC to Purchaser. The Transfer Agreement will
be dated the date on which it is signed and delivered to the escrow agent. The
original, signed copy of the Transfer Agreement will be released by the escrow
agent and irrevocably delivered to Purchaser on the date of the Closing (as
defined below). In this connection, Purchaser will prepare a draft escrow
agreement reflecting the foregoing and select an escrow agent reasonably
acceptable to Seller and the parties will use their best efforts to finalize and
enter into such escrow agreement within 10 days of the date hereof. If the
Closing does not take place in accordance with the terms hereof, Seller will
receive back the original, signed copy of the transfer agreement 180 days from
the date hereof or when Purchaser notifies Seller in writing that it has
irrevocably decided not to proceed, whichever is earlier.

 

 

 

 

2.3           Seller’s Covenants. Seller is obligated to deliver or demonstrate
at or prior to the Closing: (i) valid and binding feedstock agreement(s) in form
and substance acceptable to Purchaser, (ii) a valid and binding power purchase
agreement (in respect of which there is reasonable time to satisfy all timing
and milestone requirements and which is in form and substance acceptable to
Purchaser in its sole discretion), (iii) submitted applications in respect of
required permits, (iv) a valid, signed and binding agreement or debt commitment
letter in respect of debt finance on terms and conditions acceptable to
Purchaser in its sole discretion, (v) valid and binding lease and/or purchase
agreement (in form and substance acceptable to Purchaser in its sole discretion)
in respect of the land on which the Project will be located and (vi) valid and
binding agreement in respect of the equipment, procurement and construction for
and on behalf of the Project in form and substance acceptable to Purchaser in
its sole discretion. The foregoing items (i) – (vi) are collectively referred to
as the “Seller Conditions”.

 

2.4           Purchaser Condition.         Purchaser is obligated to deliver at
or prior to the Closing a tax credit and depreciation sale agreement or other
agreement monetizing the Project’s applicable tax credits and depreciation
benefits (the “Purchaser Condition”).

 

2.5           Closing Timing. If any of the Seller Conditions or Purchaser
Condition is not fulfilled or delivered in time for the Closing, the Closing
shall be moved to such date that is three business days after the last Purchaser
Condition and/or Seller Condition has been fulfilled or delivered in the sole
discretion of Purchaser. Section 3.2 below shall be amended accordingly without
any further action from any party hereto.

 

2.6           HSAD License. Seller hereby grants Purchaser one unconditional and
irrevocable, non-exclusive license to use Seller’s high solids anaerobic
digestion (HSAD) technology consisting of a proprietary process that uses an
anaerobic digester design developed by the U.S. Department of Energy and
subsequently modified by Seller in combination with the proprietary bacteria to
be supplied by Seller (the “Technology”) at the Project site for so long as the
Project is in operation (the “License”). Purchaser may freely sell or transfer
the License in the event of a sale or transfer of its rights in the Project to
another party. If the license is to be granted by another party, then Seller
will deliver within 5 days of the date hereof a signed license agreement from
such party.

 

2.7           Purchaser Support of Seller. (a) Purchaser hereby agrees to
support Seller to meet certain Project deadlines by taking such measures and
making such payments as Purchaser shall deem necessary or expedient to implement
the Project in a timely manner. Purchaser will use its reasonable efforts to
cause itself to be reimbursed for any such payments made by it out of the equity
funds to be invested in the Project. However, if for any reason Purchaser is not
so reimbursed, then Purchaser shall be entitled to deduct any amount not
reimbursed to it out of the development fee described on Annex A hereto.

 

(b) Subject to the following sentence, Purchaser also agrees to reimburse Seller
out of the equity funds to be invested in the Project for certain expenses
already incurred by Seller, as described in more detail on Annex B hereto (the
“Annex B Expenses”). Seller and Purchaser agree that there will be no obligation
to make any reimbursement of any nature whatsoever unless and until Seller
delivers to Purchaser documentary evidence in form and substance satisfactory to
Purchaser in its sole discretion as to the amount, timing and nature of each
Annex B Expense. Seller and Purchaser further agree that the Annex B Expenses
are the sole expenses for which Seller will receive any reimbursement. Seller
hereby waives any and all claims it may have for any reimbursement now or in the
future except for claims relating to the Annex B Expenses.

 

 

 

 

3.          CLOSING.

 

3.1           Conditions to Closing. Notwithstanding anything else herein to the
contrary and for the avoidance of doubt, the parties agree that the Closing will
take place if (and only if) the Purchaser Condition and the Seller Conditions
have been delivered or satisfied at or prior to the Closing.

 

3.2           Closing. The parties will use their reasonable efforts to fulfill
all applicable conditions and close in 2012 (as extended by Section 2.5 above).
After the fulfillment of all conditions, Seller and Purchaser agree to
accomplish the following transactions (the “Closing”):

 

3.2.1        Evidence of all Conditions being satisfied. At the Closing, each
party will deliver evidence that the conditions applicable to it have been
satisfied or delivered.

 

3.2.2        Transfer of the LLC. Purchaser will receive out of escrow the
Transfer Agreement reflecting the transfer to it of 100% of the right, title and
interest in, to and under the LLC and Seller will enter into, sign and deliver
any and all agreements and take any and all actions necessary or helpful to
accomplish the foregoing.

 

3.3           Post-Closing Actions.   After the Closing, Seller will record (or
will assist Purchaser in recording, if necessary) the ownership of the LLC in
the name of Purchaser and deliver to Purchaser evidence (satisfactory to
Purchaser in its sole discretion) of such recordation within five business days
of the Closing. Purchaser will have 15 days from the date of receipt of such
recordation to pay Seller the development fee described on Annex A hereto.

 

3.4           No Adverse Change.  It is understood and agreed that Purchaser’s
obligations under this Agreement are at all times subject to the absence of any
material, adverse changes in the commercial, legal and/or financial prospects of
the Project in the sole discretion of Purchaser so that, by way of example
without limitation, if, at any point in time, whether before or during Project
implementation, there is not a valid and binding lease or property purchase
agreement in form and substance acceptable to Purchaser, then Purchaser shall
have no obligation to close, make any payments or investment or continue with
the Project (as applicable).

 

4.          PROJECT MANAGEMENT. Seller hereby agrees to manage the
implementation and operation of the Project subject, in each case, to (i) any
agreements entered into or to be entered into in respect of the Project by
Purchaser and (ii) the supervision and control of Purchaser. Seller’s management
of the implementation and operation of the Project shall consist of (i)
reporting to all applicable authorities, (ii) permit compliance and renewal,
(iii) presence at the site, advise and assistance in operation of the Project,
in each case, as required or helpful, (iv) ongoing identification of feedstock
sources, compost off-takers and other third-parties participating in the Project
and (v) such other actions as may be required or desirable in the reasonable
discretion of either Seller or Purchaser for the management of the Project.
Seller shall manage the project as a reasonably prudent operator. Seller shall
receive an annual fee of U.S. $187,500 for providing such management services.

 

 

 

 

5.          REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Purchaser as follows.

 

5.1           No Broker-Dealer. Except for the involvement of Excelsior Capital,
Seller has not effected this transfer of the LLC by or through any
intermediaries.

 

5.2           Title to the LLC. Seller has valid marketable title to the LLC,
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest (“Encumbrances”). Upon the sale and transfer of the LLC, and
payment therefor, in accordance with the provisions of this Agreement, Purchaser
will acquire valid marketable title to the LLC, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest.

 

5.3           Consents. All consents, approvals, authorizations and orders
required for the execution and delivery of this Agreement and the transfer of
the LLC under this Agreement have been obtained and are in full force and
effect.

 

5.4           Authority. Seller has full legal right, power and authority to
enter into and perform its obligations under this Agreement and to transfer the
LLC under this Agreement, and Seller is not obligated to transfer the LLC to any
other person or entity. Seller has been duly organized and is validly existing
in good standing under the laws of the jurisdiction of its organization as the
type of entity that it purports to be and all corporate or other entity actions
necessary to authorize the transactions contemplated by this Agreement have been
duly taken. The person(s) executing and delivering this Agreement on behalf of
Seller are duly authorized to do so.

 

5.5           Intellectual Property. Seller owns or holds a valid license to any
and all intellectual property relating to the Technology and has full authority
to grant the License. Purchaser’s use of the Technology and License and/or any
subsequent transfer thereof will not infringe on the rights of any third parties
or give rise to any claims on the part of any third-parties.

 

6.          COMPLIANCE WITH LAWS AND REGULATIONS. The sale and transfer of the
LLC and the implementation and management of the Project will be subject to and
conditioned upon compliance by Purchaser with all applicable state and federal
laws and regulations at the time of such sale, transfer, implementation and/or
management.

 

7.          GENERAL PROVISIONS.

 

7.1           Successors and Assigns; Assignment. Except as otherwise provided
in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective
successors, assigns, heirs, executors, administrators and legal representatives.
Each party hereto may assign its rights in, to and under this Agreement with the
consent of the other party with such consent not to be unreasonably withheld or
delayed.

 

 

 

 

7.2           Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the Commonwealth of North Carolina without giving
effect to its body of laws pertaining to conflict of laws.

 

7.3           Notices. Any and all notices required or permitted to be given to
a party pursuant to the provisions of this Agreement will be in writing and will
be effective and deemed to provide such party sufficient notice under this
Agreement on the earliest of the following: (a) at the time of personal
delivery, if delivery is in person; (b) one (1) business day after deposit with
an express overnight courier for United States deliveries, or two (2) business
days after such deposit for deliveries outside of the United States; or
(c) three (3) business days after deposit in the United States mail by certified
mail (return receipt requested) for United States deliveries. All notices for
delivery outside the United States will be sent by express courier. All notices
not delivered personally will be sent with postage and/or other charges prepaid
and properly addressed to the party to be notified at the address set forth
below the signature lines of this Agreement or at such other address as such
other party may designate by one of the indicated means of notice herein to the
other party hereto. A “business day” shall be a day, other than Saturday or
Sunday, when the banks in the city of New York are open for business.

 

7.4           Further Assurances. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement.

 

7.5           Titles and Headings. The titles, captions and headings of this
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically stated,
all references herein to “sections” and “exhibits” will mean “sections” and
“exhibits” to this Agreement.

 

7.6           Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement and understanding of the parties with
respect to the subject matter of this Agreement and supersede all prior
understandings and agreements, whether oral or written, between or among the
parties hereto with respect to the specific subject matter hereof.

 

7.7           Severability. If any provision of this Agreement is determined by
any court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum
extent possible given the intent of the parties hereto. If such clause or
provision cannot be so enforced, such provision shall be stricken from this
Agreement and the remainder of this Agreement shall be enforced as if such
invalid, illegal or unenforceable clause or provision had (to the extent not
enforceable) never been contained in this Agreement. Notwithstanding the
forgoing, if the value of this Agreement based upon the substantial benefit of
the bargain for any party is materially impaired, which determination as made by
the presiding court or arbitrator of competent jurisdiction shall be binding,
then both parties agree to substitute such provision(s) through good faith
negotiations.

 

 

 

 

7.8           Amendment and Waivers. This Agreement may be amended only by a
written agreement executed by each of the parties hereto. No amendment of or
waiver of, or modification of any obligation under this Agreement will be
enforceable unless set forth in a writing signed by the party against which
enforcement is sought. Any amendment effected in accordance with this section
will be binding upon all parties hereto and each of their respective successors
and assigns. No delay or failure to require performance of any provision of this
Agreement shall constitute a waiver of that provision as to that or any other
instance. No waiver granted under this Agreement as to any one provision herein
shall constitute a subsequent waiver of such provision or of any other provision
herein, nor shall it constitute the waiver of any performance other than the
actual performance specifically waived.

 

7.9           Confidentiality. Each of Seller and Purchaser agrees that it will
keep confidential and will not disclose or use for any purpose any information
about the terms of this Agreement and the transactions contemplated hereby and
any confidential information obtained from the Company in connection herewith,
unless any such information (a) is known or becomes known to the public in
general (other than as a result of a breach of this Agreement by the disclosing
party), or (b) is or has been made known or disclosed to the disclosing party by
a third party without a breach of any confidentiality obligations by such third
party; provided, however, that either Seller or Purchaser may disclose such
information (i) to its attorneys, accountants, consultants, financiers and other
professionals to the extent necessary to obtain their services in connection
with the transfer and ownership of the LLC or the implementation of the Project;
(ii) to any affiliate in the ordinary course of business, provided that such
affiliate agrees to maintain the confidentiality of such information in
accordance herewith; or (iii) as may be required by law, provided that the
disclosing party promptly notifies the other parties hereto in advance of such
disclosure and agrees to cooperate to take reasonable steps to minimize the
extent of any such required disclosure.

 

7.10        Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered will
be deemed an original, and all of which together shall constitute one and the
same agreement. This Agreement may be executed and delivered by facsimile or
other means of electronic delivery and upon such delivery the signature will be
deemed to have the same effect as if the original signature had been delivered
to the other party.

 

7.11         Expenses. Each party hereto shall pay its own expenses in
connection with this Agreement.

 

7.12         Specific Performance. Unless this Agreement has been terminated,
each party to this Agreement acknowledges and agrees that any breach by it of
this Agreement shall cause any (or either) of the other parties irreparable harm
which may not be adequately compensable by money damages. Accordingly, except in
the case of termination, in the event of a breach or threatened breach by a
party of any provision of this Agreement, each party shall be entitled to seek
the remedies of specific performance, injunction or other preliminary or
equitable relief, without having to prove irreparable harm or actual damages.
The foregoing right shall be in addition to such other rights or remedies as may
be available to any party for such breach or threatened breach, including but
not limited to the recovery of money damages.

 

7.13         Indemnification/Pledge. Seller hereby agrees to indemnify and hold
harmless Purchaser from any claims, damages, losses, liabilities and/or costs
(including, for the avoidance of doubt, reasonable counsel fees) relating to or
arising out of Purchaser’s use of the Technology or License in Project. To the
extent that Seller lacks the funds to fulfill its indemnity obligations
hereunder, Seller hereby pledges its rights, title and interest in, to and under
the Technology to Purchaser for Purchaser’s full and unfettered use until such
time as Purchaser has been made whole and recouped any losses, costs or other
out-of-pocket amounts.

 

 

 

 

 

Costs of Enforcement. If any party to this Agreement seeks to enforce its rights
under this Agreement by legal proceedings against any other party to this
Agreement, the non-prevailing party or parties named in such legal proceedings
shall pay all costs and expenses incurred by the prevailing party or parties,
including, without limitation, all reasonable attorneys’ fees.

 

7.14         IN WITNESS WHEREOF, Seller and Purchaser have each executed this
Stock Transfer Agreement as of the Effective Date.

 

SELLER:   PURCHASER:           By: Anwar Shareef, CEO   By:             Address:
Orbit Energy, Inc.   Address:             3301 Benson Dr., Suite 401          
Raleigh, NC 27609    

 

Attachments:

Annex A – Compensation to Seller

Annex B – Seller Expenses

Annex C – Wire Instructions

 

 

 

 

ANNEX A

 

1. Seller to receive a $600,000 development fee, less any amounts not reimbursed
to Purchaser in accordance with Section 2.7 of the Agreement, to be paid to it
within 15 days after Seller irrevocably transfers and, if applicable, records
100% of the right, title and interest in, to and under the LLC to Purchaser.

 

2. Seller will participate in the distributable cash of the LLC as follows:

 

·Purchaser will be entitled to recoup its investment in full before any
distributions of any nature are made to Seller.

·After Purchaser recoups its investment, Purchaser shall receive all
distributable cash from the Project until it achieves a 30% internal rate of
return (“IRR”), which for the avoidance of doubt, will take into account and be
computed on the basis of any and all benefits from tax credits and depreciation.
Any distributable cash above such 30% IRR will be allocated 30% to Seller and
70% to Purchaser.

 

 

 

 

ANNEX B

 

Johnston Project incurred cost:

 

Project Development Security  $45,000  Interconnection Application Fee   2,500 
Interconnection Prep - Kupper Engr.   3,938  SW Composting Permit Fee   1,000 
SW Composting Permit - Fuss & O'Neill Support   4,808  Attorney Fees – PLDW 
 11,630  Attorney Fees – Bost (est.)   15,000  Preliminary Design Support – ATI 
 2,556  TOTAL  $86,432 

 

 

 

 

ANNEX C

 

WIRE INSTRUCTIONS

Company Wire Instructions

 

Beneficiary Name: Orbit Energy, Inc.  

Beneficiary Account: 0094345120

 

 

Beneficiary Bank: Regions Bank

 

  Bank Address: 4900 Falls of Neuse Road, Suite 100   Raleigh, NC 27609      
ABA Routing Number: 062005690   Swift Code: UPNBUS44  

 

Note: Please include Seller's name in the reference field.